What is a recession?
A recession is generally when a country’s economy declines, according to the RBA website. Economists can’t label it a recession if the Australian stock market has one bad day – you need two successive quarters where Australia‘s gross domestic product (GDP) has fallen.
Is a global recession unavoidable?
CommSec’s Craig James said it would be difficult to avoid a global recession. “Slower growth is generally anticipated but much depends on inflation trends and interest rates,” Mr James said. “If inflation moderates quicker than assumed over 2023 then rates won’t need to rise as high as anticipated and economic activity can lift,” he said.
The World Economic Forum (WEF)’s Global Risks Report 2023 released this week found Australia will face greater risks around “rivalries for natural resources” as a worldwide demand-supply gap grows, particularly for finite critical metals and minerals of which the country is a global supplier.
The report predicts that by 2050, demand for graphite, lithium, and cobalt will soar to 450 per cent of 2018 production levels.
Chief executive officer of WLTH, Brodie Haupt, said it’s “difficult” to say if a global recession is unavoidable, as economic conditions and events can change rapidly and unpredictably. “Factors such as changes in government policies, natural disasters, and global events can all have a significant impact on the global economy,” he said.
“Many economies around the world, including Australia are experiencing a rise in interest rates for the first time in years, and there is usually a lag before the reduction in spending takes effect to reduce inflation.
“There are also many economic and political actions that governments and organisations can take to try to prevent or mitigate the effects of a recession. Governments can implement fiscal policies, such as increasing spending on infrastructure projects or providing financial assistance to individuals and businesses, to help boost economic activity,” he said.
Full Article: The Daily Telegraph
