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Think of Australia’s $2.2 trillion economy. Now flip a coin.
According to a leading economist, that is the 50 per cent risk the Australian economy falls into a damaging recession at some time in the next year, following 12 punishing rate hikes which have so far failed to substantially rein in inflation.
Millions of households are this morning trying to work out how they will afford their mortgage repayments after the Reserve Bank’s decision to again lift rates yesterday.
Following Tuesday’s hike, borrowers with a $500,000 home loan must find an extra $76 each month, and their monthly repayments have increased by $1100 in just over a year.
The World Bank has declared the global economy is in a precarious state, and AMP’s deputy chief economist Diana Mousina warns a confluence of local factors has left Australia staring down the barrel at a recession.
“There are already increasing signs that the economy is weakening,” she said, amid a gloomy backdrop that has the official cash rate sitting at 4.1 per cent, compared to just 0.1 per cent in April last year.