Deloitte's latest Business Outlook report has warned that the ‘lower for longer’ environment has placed the Australian economy in a precarious position.
“Australia’s relatively stronger economy means we haven’t been as hard hit as others, but there’s nothing on the horizon, for our economy, wage gains, productivity growth or for our import price, to suggest that ‘lowflation’ will depart our shores anytime soon,” it said.
While the Australian economy remains stronger than most, buoyed by boosted commodity prices, and cheap credit keeps Australian debt low, there are persistent long-term concerns, according to Deloitte.
With a resilient, “Rocky-like” Australian dollar refusing to stay down, interest rates that have been “too low for too long”, and “eye-watering household debt”, Deloitte urged the RBA to be reluctant in cutting interest rates further.
It attributed low unemployment to a shortage of workers rather than an abundance of jobs, while part-time jobs continue to significantly outgrow full-time jobs.
Regarding the federal budget repair, Deloitte flagged a lack of breathing room for state funding to both health and education, despite Australia’s shifting demographics requiring it.
Additionally, the report noted the country’s overheated housing markets, ageing population and political partisanship as enduring obstacles, in an economy that, although “in check for now, has shaky foundations”.