The economy is reliant on households running down their savings, but will inflation and international uncertainty end up crimping spending?
Australia’s immediate economic future depends on the willingness of consumers to run down their savings, at a time of falling real wages and rising inflation.
Yesterday’s national accounts for the December quarter showed a bounce back from the lockdown-driven contraction in the September quarter last year, boosting GDP by 3.4% after a 1.9% slide in the September quarter, for a 4.2% growth rate for the year as a whole.
It’s all pretty historical stuff — but there are important points given the big question about when and how strongly the Reserve Bank will respond to inflation. In February, the RBA forecast 5% growth for 2021 and just over 4% for the year to December 2022.
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About the Authors
Business and Media Correspondent
Glenn Dyer is Crikey’s business and media correspondent.