Economic pressures anticipated in 2024: Chalmers

Treasurer Jim Chalmers highlighted a mixed economic outlook for the year ahead, forecasting various challenges and cautious optimism.

Speaking on the Treasury’s expectations, Mr Chalmers indicated a positive trajectory for wage growth and real wages, despite acknowledging the persistence of global economic difficulties.

“We’ve had two positive quarters of real wage growth and we expect real wage growth to be more sustained next year,” Mr Chalmers said.

While he anticipates moderation in inflation rates, Mr Chalmers expressed concerns about its persistent elevation compared to ideal levels.

“Inflation will still be higher than we’d like but it will be moderating,” he said.

“But the pressures that people have felt in 2023 won’t miraculously disappear and that’s why we are so focused on rolling out this cost‑of‑living help, getting the budget in better nick, and building the kind of economy that lifts living standards into the future.

“Higher interest rates are a reality, they started going up before the election and continued afterwards and they are a big reason why our economy’s slowing.

“My job is to engage in this fight against inflation on every front that I can, so cost‑of‑living help, getting the budget into better shape, migration strategy, infrastructure strategy, competition policy, investing in the supply side of the economy.”

Regarding the Reserve Bank of Australia (RBA), Mr Chalmers remained optimistic about recent changes made, including the addition of an extra governance board.

He emphasised that these modifications would enable the incorporation of diverse viewpoints and enhanced expertise, aiming to transform the bank’s culture towards best practices.

“That’s not a shot at the Reserve Bank of the past, it’s to recognise that we’ve had this review, it’s given us a whole bunch of really quite smart recommendations that we’re picking up and running with,” Mr Chalmers said.

For example to “modernise and renew and refocus the Reserve Bank” so that it makes the best decisions it can on behalf of the Australian people in their economy.

While acknowledging the challenges ahead, Mr Chalmers recognised the opportunities that lie in revitalising the economy to ensure sustainable growth.

“Right across the board there’s an opportunity for us to modernise and renew and revitalise and make more forward and future focused the key parts of our economy,” Mr Chalmers said.

[Related: RBA review implemented end of 2023: Treasury]