Australian Treasurer Jim Chalmers sounds investor alert as global risks mount
He says that risks to the global economic outlook are accumulating from every angle and all at once
[CANBERRA] Australian Treasurer Jim Chalmers said global investors are on edge and capital flows are “jumpy”, as uncertainty builds over whether the world economy can withstand mounting headwinds or will slip into a correction.
During a recent trip to North America and Asia, Chalmers said economic uncertainty was the major focus of discussions with international counterparts and major investors.
He pointed to a massive surge in gold prices this year to underline the point.
“What came through clearly in almost every conversation was that risks to the global economic outlook are accumulating – from every angle, all at once,” Chalmers said in the text of a speech in Canberra on Wednesday (Oct 29).
“Geopolitical tensions. Strains and stresses in financial markets. And the complex transitions underway in our economies, across energy, technology and demography.”
This volatility has been “normalised but not neutralised”, he told an Australian Chamber of Commerce and Industry dinner. It is not yet clear whether the world economy will continue to muddle through or if there will be a sharp correction, he warned.
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Chalmers said Australia faces these challenges from a position of strength, pointing out that it is one of only half a dozen of the 38 developed world economies not to have experienced a negative quarter of growth in the past three years.
“When you look around the world, our macroeconomic and fiscal fundamentals hold us in good stead,” he said.
The treasurer reinforced the importance of boosting productivity to improve the living standards of Australians.
The remarks come as latest data suggests Australia’s progress in taming inflation has stalled, prompting some economists to assess that the reserve bank’s easing cycle may be over. At the same time, the labor market is showing tentative signs of loosening.
Chalmers struck a positive note, pointing instead to a recent pickup in private demand and household consumption. He added that his government is focused on lifting productivity and attracting more investment.
To that end, Chalmers announced that the Treasury will start a new round of consultation on a review of the superannuation performance test to ensure it is not creating unnecessary obstacles to investment, particularly in key areas like housing and energy.
“It’s about better aligning and unlocking investment that also boosts productivity,” he said. BLOOMBERG
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