Goldman Sachs Revises Forecast for Australian Economy: Increased Risk of Recession and Rising Unemployment

Goldman Sachs Warns of Economic Slowdown in Australia

Investment firm Goldman Sachs has revised its outlook for Australian economic growth, and the news isn’t looking good. The investment bank is predicting a downward trend in the economy, with demand expected to fall further.

According to Goldman economists led by Andrew Boak, recent data suggests that house price growth has eased and there is a significant risk of a contraction in domestic demand. Additionally, other economic indicators, such as business forward orders, are pointing towards a slowdown in the Australian economy.

This grim forecast has been echoed by other financial institutions like Macquarie and NAB, who also believe that the economy is facing challenges in terms of demand. Macquarie even went as far as to suggest that there is a 50% chance of Australia entering a technical recession this year.

One of the key concerns highlighted by Goldman Sachs is the expected rise in unemployment, with the bank forecasting a jump to 4.6% by the end of 2024. This, combined with weakening domestic demand and export sector weakness, could potentially push the economy into a recession.

In response to these troubling signs, Goldman Sachs is predicting that the Reserve Bank of Australia (RBA) will start easing interest rates in November 2024. This move is expected to be triggered by softer inflation data, a cooling labor market, and easing cycles in other major economies.

Overall, the consensus among Goldman Sachs, Macquarie, and NAB is that the Australian economy is facing significant challenges ahead. The hope is that upcoming government initiatives, such as tax cuts and rebates, will help stimulate growth and pull the economy out of its current slump. The official verdict on the state of the economy will be delivered by the Australian Bureau of Statistics on June 5, when the National Accounts for the March quarter are released.