While this scenario would be temporary and eventually ease, the report found it would push the Australian economy into a “sharp recession”.
This would see GDP, the indicator for economic growth, fall 1.1 per cent by September.
“Excluding the pandemic, this would be the sharpest quarterly fall since the early 1990s,” economist and report author Harry McAuley wrote.
The report noted that the opportunity for de-escalation of the war in Iran was “narrowing”, with a prolonged conflict becoming increasingly likely.
“(Countries) should take the lead in protecting the oil that they so desperately depend on,” the president said.
“Build up some delayed courage, go to the Strait and get it, take it. Protect it, use it for yourselves.”
“We don’t want to have a recession, but if it’s hard to get inflation down, then we’re going to have to deal with that, possibly,” she said at the time.
“The longer the shock drags out, obviously, the harsher the consequences for our economy, whether that’s measured by inflation or by growth or by impacts on the labour market,” he said at a press conference yesterday.
“I would remind people that we go into this quite severe global economic shock from a position of genuine relative economic strength.”
Australia’s last technical recession occurred during the first six months of the COVID-19 pandemic in 2020 and ended almost 30 years of back-to-back growth.
Before that, the last recession was the “recession we had to have” in the early 1990s.
A recession is most commonly defined as two consecutive quarters of negative growth in real GDP but the RBA notes it can have other, broader elements.
Australia’s latest unemployment rate (seasonally adjusted) was 4.3 per cent in February, rising from 4.1 per cent in January.
While the figure alone is relatively low, it has been tracking upwards since October 2022.
The highest unemployment rate in the past decade was 7.4 per cent in June 2020 during the pandemic.
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