The Reserve Bank of Australia has delivered a hard slap to the faces of Australians downgrading its outlook for the economy yet again.

In 2013 the RBA downgraded its Statement on Monetary Policy by saying its forecasts ‘embody a gradual shift in growth from investment in the resource sector towards exports, non-mining investment and household demand.’

At the time that outlook seemed consistent and plausible with economic conditions.

Hoever, investment in commodity prices, non-mining sectors, and household demand have since remained weak.

And this weakness, says the RBA, will cripple growth for ‘the next couple of years at least.’

The pessimistic outlook has dire consequences for the currently woeful employment figures. The jobless rate is expected to continue rising and will remain high for longer than first anticipated.

Apart from the social strain, high unemployment figures signal the possibility of even further rate cuts; as the RBA tries desperately to stimulate the economy.

Further cuts to the already record low interest rates will further decimate the returns of retirees and savers.

The RBA is pinning the economy’s hopes on strong resource exports and housing construction – both of which are benefitting from the low interest rates.

Australian businesses however, are resisting the temptation of low interest rates to invest and grow. RBA Governor Glenn Stevens has admitted there is only so much Monetary Policy can do to influence this attitude; the result then will be what we are seeing now.

Leave a Reply

Your email address will not be published.