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Treasurer ‘hopes’ Australia can dodge recession

The federal treasurer is hoping Australia can avoid a recession due to its strong economic fundamentals but says the nation won’t be “completely spared another global downturn”.

Photo: Michael Errey/InDaily

Photo: Michael Errey/InDaily

Having returned from talks in Washington DC, Jim Chalmers told reporters in Canberra on Monday the global economy was on a “perilous path” when it came to the prospect of another global downturn.

“It’s our hope that Australia can avoid a recession,” Dr Chalmers said.

“We have low unemployment, we’ve got relatively solid growth, relatively solid demand.

“We’ve got good prices … for our commodities around the world with a positive impact of that on the budget.”

But he said the nation would not be completely spared from the impact of a global downturn.

Treasury has already downgraded its forecasts for major trading partners ahead of the October budget, with the department now predicting the US economy to grow by one per cent rather than 2.5 per cent next year.

The department has downgraded the UK’s annual growth rate from a two per cent lift to a fall of a quarter of a percentage point.

Treasury has also downgraded its European Union and China growth forecasts substantially and shaved a full percentage point off global growth projections.

In March, the department expected the global economy to grow by 3.75 per cent. It’s now predicting 2.75 per cent growth.

“Our best defence against uncertainty around the world is a responsible budget at home, and that’s what I’ll be handing down next week,” Chalmers said.

Meanwhile, assistant minister for charities, competition and treasury Andrew Leigh says a fresh round of competition reform is needed with stamp duty, privatisation and occupational licensing among the top priorities.

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Leigh will draw inspiration from the 1993 Hilmer National Competition Policy Review, which gave birth to certain micro-economic reforms.

“The focus of competition reform in our era should be on the private sector, where there are real concerns about Australia’s economic dynamism,” he will tell the Sydney Ideas talk series.

“Emerging trends, such as a fall in job-switching and business start-up rates, just as market concentration and mark-ups increase, suggest our economy has become less competitive.”

-AAP

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