Latest news with #AustraliaEconomy
Daily Mail
8 hours ago
- Business
- Daily Mail
Why Donald Trump's latest meltdown with Elon Musk will hit Australia
Donald Trump 's fallout with the world's richest man Elon Musk is set to hurt Australia economically because it could squeeze our exports to China. Musk became the 'First Buddy' as Trump was elected and led the Department of Government Efficiency - tasked with trying to find $US2trillion in savings - but the pair have traded barbs this week on their respective platforms, X and Truth Social. Multi-billionaire Musk owns the biggest stake in Tesla, which makes its electric cars in Shanghai, and was also the loudest critic of Trump's punitive tariff hikes against the communist superpower this year. Musk's absence from Trump's inner circle could huge ramifications for Australia if the US re-escalates its trade war with China - who, importantly, is the biggest buyer of our iron ore used to make steel. Professor Peter Dean, the director of foreign policy with the University of Sydney 's United States Studies Centre, said Trump would no longer hear the views of Musk, a businessman with strong ties to China. 'It's less likely [Trump would hold back on China tariffs] now that Elon Musk is out of government,' Prof Dean told Daily Mail Australia. 'Donald Trump will still continue to pursue the policies that he has, irrespective of what Elon says and Elon's influence on Trump has basically dissipated. 'What is Musk now? Musk is a businessman inside the United States like anybody else.' The Trump Administration in April slapped 145 per cent tariffs on China. While the US and China are in talks to substantially reduce them, Musk was clearly frustrated and predicted the American-led trade war would result in a recession in late 2025. 'The Trump Tariffs will cause a recession in the second half of this year,' he said on his social media platform X. Prof Dean said Trump's cabinet secretaries, with differing opinions on how to handle China, would no longer hear an alternative point of view within the administration. 'Elon Musk is connected to China in many, many ways that actually work against some of the views of President Trump and his team and particularly their tariffs on China,' he said. 'This is another area of concern that's caused this rift between Musk and between Trump. 'He was clearly not listening to Elon Musk's view on China and tariffs and he's even less likely to do now.' The fallout occurred just four months after Trump signed an executive order establishing DOGE, and putting Musk in charge with access to departmental files. 'There's a long history in the United States of billionaires and their involvement in politics - it normally always ends pretty quickly and it often doesn't end very well because of the personalities involved,' Prof Dean said. 'I'm actually in one way surprised it's last as long as it has.' Sarah Hunter, the Reserve Bank of Australia's assistant governor in charge of economic policy, said Australia would suffer from the US-China trade war if the Chinese government was too slow to put in place a stimulus package to spur demand. 'If this were to occur the income flows from commodity exports would fall significantly,' she told a Brisbane business lunch this week. Iron ore prices have plunged by 15 per cent, from $US112 to $US95.70 as of Friday afternoon, after the US doubled steel tariffs to 50 per cent, including on Australia. Weaker commodity prices reduce Australian government revenue from company taxes, leading to even bigger Budget deficits. This could in turn make Australian companies less likely to invest as consumers cut back on spending in an already weak economy. 'While key parts of Australia's export volumes may be relatively resilient to global demand conditions and uncertainty, domestic demand is unlikely to be completely insulated,' Ms Hunter said. 'Greater uncertainty about the future can lead households and businesses to save instead of spending and investing, and this is likely to be the case for Australian households and businesses too. 'And increased borrowing costs and risk premia in global financial markets are likely to spill into domestic markets, further weighing on activity.' Prof Dean said Trump's tariffs lacked any kind of strategy, with the American President having second thoughts about banning Chinese social media platform TikTok, despite concerns about spyware. 'He overturned the ban on TikTok because he personally likes TikTok,' he said.
Daily Mail
2 days ago
- Business
- Daily Mail
BREAKING NEWS Australia slides back into a 'per capita recession' in major blow for Anthony Albanese government
Australia is back in a per capita recession again as immigration soars. Gross domestic product per capita - or the average amount produced by every Australian - shrunk by 0.2 per cent in the March quarter, new national accounts data released on Wednesday showed. Australia had been in a per capita recession since early 2023 until the September quarter of 2024. But it sunk into negative territory again in the December quarter, followed by another bad number in the March quarter - producing a per capita recession. Productivity was flat in the March quarter, plunging by one per cent over the year to March. Weaker hourly output also potentially risks pushing up inflation as costs of faltering output are passed on the consumers. Immigration levels were still high in the year to March with 437,440 people moving to Australia on a net permanent and long-term basis, with this net figure factoring in departures including skilled migrants and international students. Treasurer Jim Chalmers tried blaming overseas factors, as Donald Trump's tariffs hamper global growth. 'Today's national accounts show that our economy continues to grow in the face of substantial economic headwinds at home and abroad,' he said. 'While overall growth in the Australian economy remains subdued, the private sector recovery we have planned and prepared for is gradually taking hold. 'With all the uncertainty in the world, any growth is a decent outcome.
News.com.au
3 days ago
- Business
- News.com.au
Australia could be in a per capita recession if GDP slumps significantly, economists warn
Top economists fear Australia could return to a per capita recession when the March quarterly figures are released on Wednesday. The nation was in a per capita recession – where population growth alone kept Australia out of an official recession – for seven straight quarters before economic activity picked up again in December. Growth is tipped to sink again in the March quarter, ahead of the ABS releasing the official data at 11.30am. Oxford Economics Australia lead economist Ben Udy told NewsWire previous partials released, including retail spending and current account balance, painted a worrying picture ahead of the full picture being revealed. 'It could push us back into a per capita recession, but it is not something I would worry about too heavily,' he said. 'The economy is just stalling and will pick up in the months ahead.' Mr Udy is currently forecasting quarterly growth of around 0.1 to 0.2 per cent when the numbers are released. Independent economist Saul Eslake agreed, telling NewsWire he no longer makes his own assessment of these figures, but based on current market forecasts, Australia could slide back into the negatives. 'The market has been forecasting [a quarterly forecast of] 0.4 per cent. 'You had a minus 0.1 from net exports but had a plus 0.1 from net inventories, so that is a wash. 'We know business investment was soft in the March quarter, it could be a tad less than 0.4'. 'If it is, that might show up as another quarter of negative per capita growth because we had seven in a row and then had an eighth that was positive.' Mr Udy also pointed to other key data from the ABS, including government consumption, retail sales and trade, all showing weak partial data prints. But he said these were driven by a number of one-off factors, including higher interest rates, low levels of consumer confidence and ex-tropical cyclone Alfred in Queensland disrupting economic activity. 'Importantly a number of these factors have been in play for a while but have been offset by strong growth in the public sector which waned in Q1,' he said. The economist said if Wednesday's figures show a per capita recession, the economy would likely snap out of it quickly, albeit starting from a low point. 'If GDP per capita was to decline in the first quarter, we would expect it to pick up pretty quickly in the months ahead,' he said.
Free Malaysia Today
3 days ago
- Business
- Free Malaysia Today
Australia central bank says higher US tariffs a drag on global economy
The expected hit to Australia's economy and the labour market was one reason the Reserve Bank of Australia cut interest rates to a two-year low of 3.85%. (AP pic) SYDNEY : Australia's central bank said today that higher US tariffs would drag on the global economy and put near-term downward pressures on prices of traded goods, though the exact impact is hard to assess given the policy uncertainties. In a speech in Brisbane, Reserve Bank of Australia (RBA) assistant governor Sarah Hunter said the central bank will closely monitor how trade policies evolve globally, with the higher uncertainty expected to lead to declines in investment, output and employment. 'But the unpredictability and unprecedented nature of the current situation makes it hard to be precise on the size of the impact,' said Hunter. 'Going forward, we will be monitoring carefully which assumption is closest to how things unfold,' Hunter added. The expected hit to Australia's economy and the labour market was one reason that the RBA cut interest rates to a two-year low of 3.85% last month and opened the door to more policy easing in the months ahead. It also considered a severe downside scenario for global trade and a trade peace scenario where tariffs would be rolled back. 'Benchmarking against the scenarios in the May statement on monetary policy (SMP) will help us identify the scenario that best reflects current conditions and the outlook, enabling the board to adjust policy settings accordingly,' said Hunter. The RBA also judged the tariffs would be disinflationary for Australia as Chinese producers, in the face of higher US tariffs, try to redirect their products to other markets. 'For countries that are not imposing higher tariffs, such as Australia, this could flow into import prices, making products cheaper and lowering inflation,' said Hunter. Headline consumer price inflation held at 2.4% in the first quarter and a key trimmed mean measure of core inflation slowed to 2.9%, taking it back into the RBA's target band of 2% to 3% for the first time since late 2021.
News.com.au
3 days ago
- Business
- News.com.au
Further signs Australia's GDP is set to slump
An unexpected fall in Australia's current account balance has become the latest economic indicator to suggest a sluggish national economy. While the drag was modest, Australia's current account balance rose by $1.7bn for the first three months of 2025 to an overall deficit of $14.7bn. This was larger than a forecast estimate of $12.5bn. Oxford Economics Australia lead economist Ben Udy said Tuesday's current account balance released by the Australian Bureau of Statistics was just another sign of a slowing economy. 'The modest drag from net trade along with recent downbeat GDP particles paints a sombre picture for tomorrow's GDP reading,' he said. The decline in the current account balance was largely driven by a fall in the Australian dollar, as net primary income lifted in Q1. The trade balance changed little in the quarter, as a small improvement in the balance of goods was offset by a $0.2bn fall in the goods and services surplus. ABS head of international statistics Tom Lay said there was mixed news for commodities. 'Commodity price falls, notably coal, led to Australian mining businesses seeing lower profits flow to foreign direct investors, which reduced Australia's income outflows,' he said. But the price of gold rose sharply in the first three months, leading to exports of goods to lift by 2.9 per cent following a 2.3 per cent rise in the last quarter. This was the first consecutive growth in exports since the June 2022 quarter. The March rise was led by non-monetary gold, with more gold being exported and prices continuing to rise from previous highs in the December 2024 quarter. 'The $4.8bn rise in non-monetary gold exports was the highest on record. It was led by $11bn of non-monetary gold exports to the USA, which was larger than the total combined value of non-monetary gold exports to the USA over the past four years,' Mr Lay said. Without the gold contribution, goods exports would have fallen by 1 per cent in the March quarter. Separate business indicator data also released by the ABS painted a similar picture with company gross operating profits falling 0.5 per cent for the March quarter on the back of a weaker mining sector. Company gross operating profits also fell by 6 per cent. The current account balance also showed exports of services fell 1.7 per cent this quarter, with a 2.8 per cent fall in travel services. Education-related travel exports also declined in the March quarter. 'Cost-of-living pressures and global uncertainty still appear to be weighing on households' travel plans, with both exports and imports of travel services declining in the quarter,' Mr Udy said.
