Treasurer Jim Chalmers and the other attendees at this week’s meeting of the G20 finance ministers and central bank governors may be suffering from whiplash.
Already a subscriber?Attendees at this week’s meeting of the G20 finance ministers and central bank governors in Washington may be suffering from whiplash.
The question for economists is whether Australia’s economic outlook resembles the United States or the rest of the developed world, where near-term rate cuts are still on the cards. There are many good reasons to think the United States is an outlier. Meanwhile, the Biden administration is stimulating the economy at the worst possible time, running a budget deficit of around 6 per cent of GDP as it doles out hundreds of billions of dollars in green manufacturing subsidies as part of the Inflation Reduction Act. The Albanese government, by contrast, is on track to deliver a second consecutive surplus, assisted once again by the earnings from Australia’s big miners.
Less welcome for the treasurer was the IMF’s timely warning about the perils of government-led industry policy, which is enjoying something of a renaissance among Western governments, as they grapple with the dual concerns of decarbonisation and securing supply chains.
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