Australia is on course to “muddle through” an economic slowdown driven by drought, a weak housing market and scared consumers, as confidence ‘crumbles’ in the face of uncertainty and ongoing bushfires.
That’s the view of Deloitte Access Economics partner Chris Richardson, who today dropped a report canvassing Australia’s economic fortunes in 2020. Richardson notes global growth — which recently slipped under 3% — is approaching a nine-year slump, but says it is “disappointing rather than dire”.
The economist says 2020 won’t be the year for economic recovery though, with persistent nay-saying expected to give way to a self-fulfilling prophecy that will, alongside a weak housing market and drought conditions, lock Australia into slow growth.
“We’re on course to keep muddling through the impacts of drought, housing-related weakness, and scared consumers,” Richardson said.
“The nation’s growth won’t lift all that much from today’s decade low, and we don’t expect unemployment to drop or wages to accelerate through 2020.
“We’ll be comfortably treading water rather than roaring into recovery.”
Richardson says the RBA’s lacklustre efforts to explain its strategy over the last year have led ordinary Australians to a “Maccas moment (of the Engadine variety)”, which is internet meme talk for shitting themselves.
What does that mean for Aussie SMEs? Well, wages aren’t expected to increase, but that’s not necessarily great news for those with the highest wage costs: consumer-facing businesses.
That’s because the retail sector, which relies on the state of consumer wallets, is in its deepest downturn since 1990, while the construction sector is shrinking at the fastest rate since 1999.
There are some gems in the rough though. Healthcare is roaring along, approaching record high growth, while education (Australia’s third-largest export) is swimming along too.
Firms in the information technology sector are also expected to benefit from ongoing growth, which is good news for startups.
What do you think about Australia’s economic prospects for 2020? Let us know: [email protected]