Canberra's economy will grow faster than the national average, a new outlook forecasts, as "daunting" global trends over the past three months signal recessions will hit more than a third of the world's economy in the next year.
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Australia's good position means only two more interest rate hikes are likely before the Reserve Bank caps its efforts to combat rising inflation, the new quarterly Deloitte Access Economics outlook forecast.
Treasurer Jim Chalmers, less than a week out from delivering his first budget, said that he was "substantially" rising down global growth expectations, particularly the United States, the UK, Europe and China.
"That has obvious consequences for us," Dr Chalmers said on Wednesday.
"Our forecasts that I release in the budget on Tuesday night will show the Australian economy continuing to grow, but threatened by the global downturn, threatened by rising interest rates and some of the other uncertainties that we're navigating at the moment."
Deloitte forecast the ACT economy to grow 4.0 per cent in 2022-23, second only to NSW with 4.1 per cent.
Australia as a whole is expected to grow 3.2 per cent, the outlook expects, with a 5.2 per cent growth in consumer spending and 2.8 per cent increase in business investment.
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While a weaker global economy, a downturn in the housing market and low consumer confidence remain a drag on the economy there is less pressure on the RBA, says Deloitte Access Economics director Cathryn Lee. She forecasts inflation will begin to retreat in 2023 after two more interest rate hikes.
"At the same time, a strong labour market, rapidly improving net migration and firming wages growth mean that Australia is in a solid position to weather the storm and avoid recession," she said.
The labour shortage isn't going away, but is no longer growing, her report forecast. Unemployment would level to 3.7 per cent, with just shy of 400,000 people gaining jobs in 2022-23 on the back of 327,000 extra people in the labour force. This will be welcome news for the almost three quarters of recruiting employers who have reported difficulty hiring workers.
The public sector spend would grow by 3.1 per cent over the next year with demands on the public purse for large social programs and growing defence costs.
Federal Labor has promised to rein in wasteful government spending, and reinvesting in the public sector ahead of its post-election budget next week, but also expenditure falls in pandemic-related health and economic measures.
Government spending overall is forecast to grow from around 22 per cent of the economy today to 24 per cent over the next decade. Public sector investment, such as addressing infrastructure gaps, is expected to fall from almost 4.4 per cent of the economy to closer to 4 per cent by 2024-25.
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Harley Dennett
Former federal politics bureau chief for the Canberra Times, via a career that's taken me from rural Victoria to Washington DC. Telling the stories of my local LGBTI community brought me to political journalism, where I've covered eight budgets, four national elections in two countries, Defence, public service and international governance.
Former federal politics bureau chief for the Canberra Times, via a career that's taken me from rural Victoria to Washington DC. Telling the stories of my local LGBTI community brought me to political journalism, where I've covered eight budgets, four national elections in two countries, Defence, public service and international governance.
