Economy at risk from China’s COVID wave

China’s COVID-19 wave, the war in Ukraine, interest rate movements, natural disasters and the slowing global economy are the key sources of uncertainty hanging over Australia’s economic fortunes.

Treasurer Jim Chalmers fears the Omicron wave devastating China will have serious ramifications for the economy in 2023.

“Clearly, when the Chinese market and Chinese suppliers are such a substantial part of our own economy, people – not just business leaders, but economists and others – have their concerns about the impact of this COVID wave in China on our economy,” he told reporters on Monday.

“I share those concerns.”

On Sunday, the Australian government followed other nations in requiring negative COVID tests for travellers flying into Australia from China.

Dr Chalmers said there would be cost-of-living relief in the May budget in the form of already-announced energy price measures and he didn’t rule out further assistance to support Australians through tough economic times.

“We will always do what we can to support people dealing with high inflation, provide responsible cost-of-living relief, as we did in October, as we will in May, if we can afford it,” he said.

Dr Chalmers also commented on fertility rate figures revealed on Monday, noting that Australia’s ageing population presented both challenges and opportunities.

“It’s so important that we’re doing what we’re doing to build the kind of workforce we need to support our population as it changes, as it grows and as it ages as well,” he said.

Australia faces an ageing population despite the fertility rate bouncing back after a pandemic-era low.

As in other developed countries, births dropped off sharply during the pandemic as would-be parents put off plans to have children amid the period of uncertainty.

The newly released government data showed the downturn was short-lived and births rebounded in the first half of 2021.

But modelling also predicts Australia’s fertility rate following a long-running trend and declining from 1.66 babies per woman in 2021/22 to 1.61 in 2030/31.

 

Poppy Johnston
(Australian Associated Press)

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