Australia expects unemployment rate to rise as global economy slows

Sydney, July 16 (BNA): Australian Treasury Minister Jim Chalmers said today, Sunday, that he expects the unemployment rate in the country to rise from its lowest level in 48 years, on the back of rising interest rates and slowing global growth.

“Since the RBI and Treasury forecasts will moderate inflation over the coming months, there is also a rise in the unemployment rate,” Chalmers told the Australian Broadcasting Corporation, as reported by Reuters.

Amid rising inflation, the unemployment rate fell in May to 3.6%, when analysts had expected a steady 3.7%.

The Reserve Bank of Australia (RBA) has said the unemployment rate must rise to around 4.5% – still well below pre-pandemic levels – to rebalance the economy.

Chalmers said before attending a meeting of the Group of Twenty (G20) finance ministers and central bank governors in India with outgoing RBA Governor Philip Lowe.

The Reserve Bank of Australia this month kept the liquidity rate at an 11-year high of 4.10%, having raised interest rates by 400 basis points since May last year, but warned that further tightening may be needed.

The decision came after June data from the Australian Bureau of Statistics showed that the Australian economy grew at its weakest pace in 1-1/2 years in the most recent quarter, while emerging indicators pointed to more softness ahead.

MI