Wage Increase and Mortgage Relief Expected
Australian Economy in 2024: Wage Increase and Reduced Mortgage Payments Anticipated
Australian households are poised for a sigh of relief in 2024, with the advent of the first real wage increase since 2021, and a reduction in mortgage repayments. This forecast comes amidst potential global economic disturbances such as the potential re-election of Donald Trump and burgeoning Middle East tensions. However, a deceleration in inflation is on the cards, as predicted by economists, the Reserve Bank, and the federal Treasury, which could ease the economic burden on consumers and businesses.
Anticipated Economic Slowdown and Unemployment Rise
The Australian economy is expected to hit the brakes, with a projected rise in unemployment rates. Following a 1.25 percentage points increase in interest rates by the Reserve Bank in the past year, the anticipated decline in inflation has led financial markets to predict a trim in interest rates starting mid-2024. In line with this, the Reserve Bank is gearing up for a new operational format, switching to an eight-meeting-a-year system, and potentially setting up a separate committee for interest rate decisions.
Downward Trend in Economic Growth and Consumer Spending
Economic growth is anticipated to dip to 1.5% for the 2023-24 financial year, with consumer spending showing a downward trend. However, tax cuts effective from July 1 aim to pump at least $20 billion back into the pockets of individuals earning over $45,000, offering some financial respite.
Budget Surplus Amid Economic Challenges
Despite the economic headwinds, Treasurer Jim Chalmers managed to secure the first budget surplus in 15 years for the 2022-23 fiscal year, and a second consecutive surplus appears likely for 2023-24. The job market has remained resilient, with unemployment rates under 4% since March 2022, and a record number of people, particularly women, joining the workforce.