Homeowners will feel the crunch of higher mortgage repayments while pay rises will be eaten up by inflation until next year, some of the nation’s pre-eminent economists believe, despite unemployment on track to reach 50-year lows.
In the middle of a cost-of-living crunch set to dominate the upcoming federal election, The Sydney Morning Herald and The Age Scope panel of more than 20 of the nation’s top economic experts predict inflation will rise solidly over the next two years prompting interest rate rises that will have a knock-on effect for home values. At the same time, the dole queue will be shrinking rapidly.
Unemployment is expected to get to 1970s-era lows.Credit:Getty
The Scope panel on average expects joblessness to reach lows not seen since the 1970s by the middle of this year, with a 3.8 per cent unemployment rate in the June quarter. The rate is then tipped to edge down to 3.7 per cent by June next year. This is slightly more optimistic than the Reserve Bank’s forecast of 3.75 per cent.
Unemployment held steady at 4.2 per cent in January despite the Omicron COVID-19 outbreak earlier in the month. Of the five economists who expect the rate to remain above 4 per cent by mid-2023, only three expect it to deteriorate from its current position.
This includes industry consultant Margaret McKenzie who expects the jobless rate to rise to 4.5 per cent this year and remain at that level for another 12 months. Macroeconomics Advisory’s Stephen Anthony expects the rate to rise to 4.5 per cent in June 2022 and keep rising to 5.7 per cent the year after.
The most optimistic forecaster is ANZ’s David Plank who expects the rate to fall to 3.3 per cent by mid-2023.
The panel expects the economy will expand 3.7 per cent in the year to June and 3 per cent through the following 12 months.
There is plenty of disagreement among the panel as to how the economy will perform. The 2022 predictions for GDP growth range from a low of 2 per cent, forecast by Mr Anthony, up to a high of 5.2 per cent by KPMG partner Sarah Hunter. For 2023, the lowest forecast is again from Mr Anthony at 2.2 per cent, and the highest is 4.3 per cent forecast by both St George Bank’s Besa Deda and Westpac’s Bill Evans.
Mortgage repayments and inflation risks rise but joblessness to improve
Source: Philippines Alive
