Australian Treasurer Jim Chalmers has expressed concerns about the global economic uncertainty and its potential impact on the Australian economy. Speaking on the national broadcaster ABC’s Insiders program, Chalmers noted that the Chinese economy was displaying “some worrying signs.” He acknowledged that the global economy is currently in a precarious state, with the American economy proving to be resilient, but the Chinese economy exhibiting signs of slowdown and Europe being in recession.
With the Australian economy expected to slow down, Chalmers stated that the Treasury is forecasting a moderation of inflation and an increase in the unemployment rate. He acknowledged the substantial challenges facing the economy, both globally and domestically. Chalmers also mentioned that the slowdown in the economy is expected to be significant and will have implications for the unemployment rate.
Chalmers’ comments come just ahead of the release of new unemployment data on July 20. The latest figures from June showed a surprising decrease in the unemployment rate to 3.6 percent, contrary to expectations of it remaining steady. Chalmers praised the resilience of the Australian labor market but also acknowledged the ongoing debate among economists regarding what full employment would look like in the current economy.
The reliance of Australia on China, its largest trading partner, has been a concern amidst the global economic uncertainty. However, there have been positive developments as Australian exports have successfully diversified away from China. The imposition of trade impediments by the Chinese Communist Party (CCP) in retaliation for Australia’s tough-on-CCP policies has led to a significant portion of Australian exports finding new markets. Analysis of export data by the Australian Strategic Policy Institute (ASPI) shows a decrease in China’s share of Australian exports from 42.1 percent in July 2021 to 29.5 percent in August 2022.
Meanwhile, the Chinese economy is experiencing a rapid downturn, indicated by a growing crisis in youth unemployment and diminishing export data. Chinese Premier Li Qiang blamed foreign countries for China’s economic problems, while stating that the Chinese economy was showing a positive trend of recovery under President Xi Jinping’s leadership.
Official data reveals that China’s youth unemployment rate was 20.8 percent in May, but this does not account for the large number of Chinese youth who have withdrawn from the labor market and are not actively seeking employment. Estimates suggest that about two-thirds of China’s 100 million young urban population fall into this category. Experts believe that the actual youth unemployment rate could be as high as 80 percent.
Various factors contribute to China’s youth unemployment issue, including the government’s emphasis on certain industries, such as chip manufacturing and electric vehicles, at the expense of a more diverse knowledge and service-based economy. The recent decline in exports and imports reported by China’s Customs Bureau further indicates the challenges facing the Chinese economy.
In conclusion, Australian Treasurer Jim Chalmers has expressed concerns about the global economic uncertainty and its potential impact on the Australian economy. While acknowledging the challenges, Chalmers also highlighted the resilience of the Australian labor market. Australia’s diversified export markets have helped offset the impact of trade impediments imposed by China. Meanwhile, the Chinese economy is facing its own challenges, including a growing crisis in youth unemployment and declining export performance. The situation highlights the interconnectedness of the global economy and the need for continued monitoring and adaptive measures.