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Accounting firm KPMG tipping Australian economic growth, wages, house prices to stay weak until 2022

How a weak economy and low house prices mean it could be YEARS before your next pay rise

  • KPMG expecting economy, house prices to remain weak for another three years
  • It is also forecasting wages remaining flat with labour demand to stay subdued 
  • Accounting giant has unveiled gloomy forecasts between now and end of 2022 

Australian workers are unlikely to be receiving a pay rise any time soon with the economy and house prices tipped to remain weak for at least another three years. 

Economic growth in Australia is already at the weakest level since the global financial crisis a decade ago.  

Things are unlikely to speed up by much between now and the end of 2022. 

Australian workers are unlikely to be receiving a pay rise soon with the economy and house prices tipped to remain weak for at least another three years (pictured is a stock image of a waitress) 

Australia’s gross domestic product expansion pace of 1.8 per cent in the year to March was already the slowest since 2009.

Accounting firm KPMG is expecting official data for the June quarter to show economic growth slowing even more to 1.4 per cent, despite a series of interest rate cuts that have taken the cash rate to a record-low of one per cent.

By the end of 2022, it expected Australia’s annual growth pace to hit 2.6 per cent, a level that is well below the long-run average of three per cent since the last recession in 1991. 

KPMG Australia’s chief economist Dr Brendan Rynne said while 300,000 jobs had been created in Australia during the past year, leading economic indicators suggested demand for labour remained soft. 

His quarterly economic report on Australia also forecast unemployment rising from 5.2 per cent now to 5.4 per cent in 2021, as wages growth continued to remain weak for a record time.

Dr Rynne said the Reserve Bank of Australia was likely to cut interest rates again by the end of the year, which would take the cash rate to a new record low of 0.75 per cent.

Australia's gross domestic product expansion pace of 1.8 per cent in the year to March was already the slowest since 2009. Accounting firm KPMG is expecting official data for the June quarter to show economic growth slowing even more to 1.4 per cent

Australia’s gross domestic product expansion pace of 1.8 per cent in the year to March was already the slowest since 2009. Accounting firm KPMG is expecting official data for the June quarter to show economic growth slowing even more to 1.4 per cent

‘In the short term, growth in household consumption is expected to remain soft – due to low employment growth, negative wealth effects associated with falling house prices and marginal real wage growth,’ he said on Monday.

While real estate data firms CoreLogic and the Domain Group are expecting the Sydney and Melbourne housing markets to rebound from 2020 as a result of stronger auction clearance results, KPMG was less optimistic. 

‘Housing investment is expected to continue falling until 2022 when growth turns positive,’ KPMG’s quarterly economic outlook report for Australia said.

Since peaking in 2017, Sydney’s median house price has dived by a record 17.4 per cent while Melbourne’s equivalent values have plummeted by 14.8 per cent, CoreLogic figures showed.

KPMG's quarterly economic report on Australia also forecast unemployment rising from 5.2 per cent now to 5.4 per cent in 2021, as wages growth continued to remain weak for a record time

KPMG’s quarterly economic report on Australia also forecast unemployment rising from 5.2 per cent now to 5.4 per cent in 2021, as wages growth continued to remain weak for a record time

Read more at DailyMail.co.uk


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