Australia’s economy is forecast to grow by 2.5% in 2020, but there’ll be little change to salary growth and unemployment rate, according to the Commonwealth Bank’s chief economist.
Commonwealth Bank has produced a research paper on issues for Australia in 2020, stating that, while the market would skew in a more favourable direction, the 2.5% increase would be another year of sub-trend growth.
This rate of growth would make it tough to reach any inroads into unemployment. Furthermore, salary growth would struggle to get any traction.
Brexit, a downturn in the Chinese market and the prospect of a US recession were cited as global risks to the local market.
When you drill down to per capita amounts, it becomes worse. Australia managed just 0.2% GDP growth per capita. Compare that to 1.4% in the US and 1% of Europe.
For a market barely growing, it is unsurprising then that the unemployment rate is stuck at 5.3% and underemployment in 8.5%. In other words, that means there is 725,000 Australians without jobs who want them and 1.15 million that are working fewer hours than they would like.
Those figures have lots of calling for the government to invest money to be able to stimulate the market, rather than cutting spending to reach a small budget surplus.
Nevertheless, Australia is well placed to manage these and coverage options are available.