Federal Treasurer Josh Frydenberg has painted a pessimistic outlook for the Australian economy as the Coalition ramps up its bid for re-election.
- The Treasurer has warned that Australia is facing domestic pressures and risks from the global economy
- The IMF has lowered its expectations for the world economy’s growth, down to 3.5 per cent this year
- China’s economy grew 6.4 per cent in the December quarter, its slowest rate of growth in a decade
Mr Frydenberg warned of “storm clouds hanging over the global economy” and said his party’s economic plan could bring about “growth, aspiration and budget repair”.
“Persistent trade tensions, high global debt levels and a contraction in growth in several key economies has changed the global outlook,” he said in a speech to The Sydney Institute.
Mr Frydenberg’s pitch — essentially that his party would be a steady hand guiding the local economy — comes after Australia’s largest trading partner, China, released its latest GDP figures earlier this week.
“The German and Japanese economies recorded negative growth in the September quarter, while China has seen its growth slow to its lowest [quarterly] rate since 2009.”
The German economy posted its weakest annual growth rate in five years (+1.5 per cent), while Japan’s economy’s contraction in the September quarter was worse than expected (-1.2 per cent).
China released its fourth-quarter (2018) GDP figures yesterday, revealing that economic growth had slowed to 6.4 per cent (since the December 2017 quarter) — and 6.6 per cent, compared to the previous calendar year.
The Treasurer’s speech also coincides with the International Monetary Fund cutting its growth forecast for the world economy — for the second time in three months.
The IMF expects global growth to slow down to 3.5 per cent this year, and 3.6 per cent in 2020.
It cited the US-China trade war, the risk of a “no deal” Brexit, and sharper-than-expected slowdowns in China and Turkey as some of the main reasons for the downgrade.
‘Invisible hand of capitalism delivers’
Aside from the risks in foreign markets, Mr Frydenberg said the Australian economy also faced some unique pressures of its own.
He also trumpeted Australia’s economic resilience — 27 years without a recession — in spite of the global financial crisis, saying that it was a growth story that “both sides of politics have overseen”.
Mr Frydenberg also resumed his attack on the Opposition’s economic policies.
After briefly giving credit to past Labor governments for economic reforms, Mr Frydenberg argued that “the invisible hand of capitalism delivers far more than the dead hand of socialism”.
“Labor is promising one of the most radical, aggressive and dangerous tax and redistribution agendas Australia has ever seen,” he said.
He was referring to Labor’s proposed overhaul of the franking credit system — which would prevent some domestic shareholders, who are not paying tax, from converting these credits into a cash refund from the Australian Taxation Office.
Mr Frydenberg also his continued attack on the Opposition’s plan to abolish negative gearing for new investors wanting to buy existing properties — a policy that has experts divided on whether it will benefit or damage the economy.
Labor’s shadow treasurer Chris Bowen hit back, arguing that the Treasurer’s attack on the Opposition’s policies highlighted a dearth of ideas within the Government.
“We had a speech from the Treasurer today, an opportunity for him to outline his plans to deal with low wages growth, low productivity growth and high household debt,” Mr Bowen told reporters.
“Instead, what we got was the Treasurer continual obsession with being in effect the shadow treasurer to the Labor Party, running a scare campaign about Labor policies.”
The Coalition is expected to face an electoral defeat at the next election, which is tipped to be held in May.
The most recent Newspoll indicates Labor is leading the Coalition 53 to 47, while The Guardian’s Essential Poll has the margin at 52 to 48.
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