Australia's economy, which until recently showed signs of stabilization after the pandemic, suddenly found itself in a precarious position, despite attempts by the authorities to keep growth and inflation under control. This is stated in a Bloomberg article, writes UNN.
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The Reserve Bank of Australia (RBA) left the benchmark interest rate unchanged, acknowledging that economic activity is weakening and private demand and the labor market are under pressure.
Some inflationary pressures may remain in the economy
Although inflation has fallen from post-pandemic highs, the threat of stagnation remains real. Housing prices are rising again, but consumer confidence is at a low, and unemployment, officially at 4.5%, hides a trend of declining employment.
RBA Governor Michele Bullock acknowledged that monetary policy is "quite close to neutral," meaning it neither stimulates nor restricts the economy. At the same time, she left the door open for further easing if the situation becomes riskier.
Analysts note that after decades of stable growth that made Australia one of the most successful examples of a developed economy, the country is now facing the danger of a recession caused by high household spending, weak demand, and instability in the labor market.
The former "golden years" of economic boom are in the past, and to regain development momentum, the country will have to look for new growth drivers – particularly in technology, exports, and energy sector reform.
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