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Australia consumer confidence near 50-year low as oil shock fades
Economists say the Middle East de-escalation has eased recession fears by pushing global oil back to around US$72 a barrel, but household stress and weak growth remain.
Australia’s recession risk is seen as lower than previously feared, but the outlook is still described as “dreary” as households grapple with the lingering effects of high prices, according to analysis cited by Guardian Economics.
The article links improved sentiment to the retreat in global oil prices after de-escalation in the Middle East, which has removed some of the worst-case energy scenarios. It notes that oil had spiked to as high as US$120 a barrel before retreating to about US$72, with Commonwealth Bank analysts expecting it could fall to US$60 by the end of this year, while warning about the risk of renewed disruption through the Strait of Hormuz.
Despite the easing energy outlook, high inflation remains a key concern. The article says inflation is running at about 4%, down from the May budget’s forecast peak of 5%, and unemployment has risen only slightly over the past three months to 4.4%.
Economists cited by Guardian Economics also warn that weak growth could still bring per capita contraction, with one analyst saying GDP per person is set to contract for two consecutive quarters and another describing the near-term outlook as unusually pessimistic. Commonwealth Bank’s head of Australian economics, Belinda Allen, said no further Reserve Bank rate hikes are expected, while noting lingering risks.