BoQ Chief Economist says economy improving
By Mitch Gaynor
A TOP economist has told a pessimistic Hinterland audience that interest rates were increasingly and unlikely to fall this year but that the economy was improving.
Bank of Queensland Chief Economist, Peter Munckton, delivered his assessment of the Federal Budget at a Glasshouse Country Chamber of Commerce After Hours event last Thursday evening.
Speaking to about 60 people at the Glasshouse Christian College, Mr Munckton said that increased government spending and cost of living measures were not expected to fan inflation, which was falling in tandem with a global trend.
But he said it was clear that businesses and ‘middle Australia’ especially, were doing it tough.
Asked for a show of hands about people’s thoughts on the state of the economy in 12 months time, a clear majority thought it would be worse.
But Mr Munckton said all indicators were pointing to improvements.
“I’m as confident you can possibly be that the economy will be better this time next year,” he said.
“We’re not doing great as an economy right now. In effect it’s darkest before dawn, but as the months go on it will slowly get lighter.
“The amount of work still outstanding is more than it’s been before. There’s a huge amount of work that needs to be done.
“And those numbers don’t include the houses we have to build, green transition, defence or all the things in the care economy, such as aged and childcare.”
Mr Munckton said while inflation was falling globally, Australia was lagging about six months behind Europe and the US, which were looking likely to be cutting rates soon.
“On the inflation side, there’s good news,” he said.
“We’re following the world.
“Right now we’re at 4 per cent and the rest of the world is at 3 per cent.
He said the net result would be that rates would fall “less and later”.
“Later means we might not get rate cuts this year and when they go down they might go down less, maybe half a percent or more,” he said.
He said as wages increased faster than inflation, this would put more cash into households, which would see an increase in spending.
mitch@gcnews.com.au
