Australian economy- A snapshot of the current status

The world is in a brink of a recession, and the urge to push to the next year has been the game since the beginning of next year. Nations like Germany and New Zealand have been the first to take the brunt of a technical recession.

Australia, a nation neighbor to New Zealand, is now facing a difficult time in terms of the economic conditions. With the interest rates being hiked by the governor of the central bank of Australia back in June, there has been a severe kickback in the hands of the consumers. The rising prices of commodities in the economy meant that inflation stood at a higher rate in a range of 6-7%. Governor Philip Lowe argued that it was done to smoothen out the economy in terms of inflation, but it turned out to be the opposite. It added a lot of pressure in terms of housing mortgages. The loans are said to have become expensive and have started to switch between the fixed and recurring deposit schemes.

In the latter part of last month, the central bank officials came out with the claim that inflation is here to stay for the long term. It is invariably going to put a lot of pressure in terms of the other economic indicators in the country. One of the important facts is that this is to add pressure to the unemployment figures. To counter this aspect, decision to raise the minimum wage by 5.75 percent. This would help in balancing the inflation pressure. For the initial year as in 2023, there would be a raise of 4 percent in wages, gradually there would be smaller increases in wages to balance out the rise in inflation.

With the recent events, of jostling with the rise in inflation and issue of unemployment, the performance of Philip Lowe, the present central bank governor was in question. With significant backlash from the opposition leaders in the Australian parliament, his bid to run for a second term became the headline all comes to rest. Michelle Bullock would now take the reins of the Reserve Bank of Australia. She is said to be the first woman to run the central bank in Australia. Bullock is known to be a well-known economist and has been in the central bank as early as 1985. In a recent interview with the press, she stated that in the coming days, she would deliver the policies that would benefit the people of the country. The main challenge for Bullock would be bringing down inflation to an acceptable level. It will remain to see what policies would come forth in her leadership to contain the situation.