Data to be released on Wednesday is expected to show the economy expanded another 0.8 per cent through the final three months of 2022,taking annual growth to 2.8 per cent. Figures on Monday showed a drop in the volume of manufacturing and wholesale trade sales through the quarter but a 10.6 per cent jump in company profits,while wages and salaries increased by 2.6 per cent to be 11.6 per cent higher through the year.
But the RBA,which has lifted interest rates at its past nine consecutive meetings – from 0.1 per cent in May to 3.35 per cent this month – and isexpected to raise them again next week,is forecasting the economy to grow by just 1.5 per cent this calendar year and through 2024.
KPMG Australia chief economist Brendan Rynne told the exclusive survey of 20 economists he did not expect a recession this year,although there could be a small contraction in the size of the economy in the current March quarter before growth through the following quarters.
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Rynne said much hinged on the RBA’s aggressiveness,which financial markets suggest could take the official cash rate to 4.25 per cent by September.
“The risk to this outlook is towards the downside and is largely dependent on how hard the RBA uses monetary policy to bring inflation back towards the target band,” he said.
“If the market is correct and the cash rate moves up to around 4.25 per cent,then there is a greater likelihood that consumption activity will grind backwards,[the] housing investment slowdown will worsen and business investment will weaken.”