Posted November 09, 2019 05:22:47 A few months after the global financial crisis hit, Australia’s economy had a huge boost from its own growth, but a much bigger one from the globalisation of the labour market.
“We are seeing a lot of people who have been unemployed for years and who were just looking for a way out of it,” said Mark MacKinnon, managing director of the Reserve Bank of Australia.
“So they are not looking for another job, they are looking for something else.”
So far this year, the Reserve has been forced to cut interest rates by half, the first time in nearly 20 years the central bank has cut rates in this way.
This has led to an immediate boost to the economy.
“It’s very good news for us and the people who need to see it, because it’s the first indication that we’re actually getting a bit of a rebound from this,” Mr MacKinn said.
“That’s a good sign.”
However, the outlook for the future remains very uncertain.
Mr Mackinnon said the biggest risk for the economy right now was a slowdown in the world’s second-biggest economy, China.
That could lead to a drop in global demand for Australian goods and services, and result in an even bigger boost for the mining sector.
However, a more worrying prospect is a slowdown of China’s economic growth.
“I would not be surprised if China slows in the first quarter,” Mr MacDonald said.
The central bank expects growth to slow to 1.8 per cent this year and to 1 per cent next year.
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