“In Australia as well,the inflation persists,and we are going to have to take action to slow the economy as part of reining that in,” she said at the Macquarie Australia Conference.
Even so,Wikramanayake said Australia’s economy had performed better than many others over the last 25 years,and she argued there were a few key reasons why it would be more resilient this time around as well.
“I think there are a few underlying and structural drivers that impact that,and I think they will also result in our having a milder downturn than big global economies,” Wikramanayake said.
After Wikramanayake’s remarks,the Reserve Bank announced it was raising official interest rates to 3.85 per cent,and said it could increase interest rates further. The change,which was not priced in by financial markets,would increase monthly repayments on an average $500,000 loan by $78,RateCity said.
Some economists worry the RBA is pushing too hard on the brakes,with head of Deloitte Access Economics saying the central bank’s latest hike was unnecessary,and it was playing “recession roulette.” But Wikramanayake saidstrong immigration and access to natural resources would help to shield the domestic economy.
“As you all know,immigration has really picked up again. So,that is going to drive underlying growth here,which will shield us a bit from the extent of the downturn that global peers are going to have,” she said.