Australia’s plan to halve the net number of immigrants entering the country may not be enough to curb steadily rising inflation, economists say.
Several respondents to the Australian Financial Review’s quarterly survey of economists indicated that any effort to curb migration would alleviate high recruitment costs and ease strain on the labor market. However, inflation is not expected to return to its target for at least 12 months yet.
The Treasury, in its May budget, projected that net migration would decline sharply to 260,000 by June 2025, after the government made efforts to curb migration by adding restrictions on the number of foreign students.
Several economists believe a drop in net migration would help ease pressure on rents. Robert Duong
But not all economists are convinced this will be enough to curb inflation, which hit a six-month high of 4% last month.
“Cutting some of the migration flow will certainly be a significant call on the economy, but it will also reduce the economy’s productive capacity,” said Matthew Peter, lead economist at QIC. “The net effect on expansion is undoubtedly negative, but the effect on inflation is less clear. »
Barrenjoey’s Masters also noted that while immigration restrictions would lead to a contraction consistent with capita spending, population growth, at 260,000 people, was still higher compared to pre-pandemic averages. It also expects spending to improve, helped by an increase consistent with a genuine source of revenue. revenue growth.
The median forecast of 38 economists in the quarterly survey sees core inflation returning to target diversity of 2% to 3% through June 2025. Still, a dozen economists surveyed expect this to take even longer, expanding the scope of further inflation adjustment. the Reserve Bank this year.
The bond market is pricing in a 30 percent rate hike at the next RBA board meeting in August and forecasts 54 percent through the end of the year.
“Few easy victories”
While most economists still think the central bank’s next move will be downward (but not until later this year or in 2025), there is a developing cohort, such as judo’s Warren Hogan and Picton of Benjamin Rabobank, which expects rates to rise to 4. 6% next year. month.
The central bank has already raised interest rates by issuing 4. 25 percent from 2022 to curb inflation, but demographic expansion has exacerbated the housing shortage and driven up rents.
This has led the government to introduce stricter visa rules, with foreign academics, who make up part of all net migration, being hit the hardest. The government also imposed a 125% increase in application fees for foreign scholars this week.
Besa Deda, lead corporate banking economist at Westpac, said the government’s target of 260,000 net migrations, down from last year’s record outbound migration of 547,300, would still be a “strong result” that would expand client spending and broader economic activity.
She hopes this will be enough to “alleviate some of the inflationary demands and pressures in the economy, in addition to rents and other services. “
Goldman Sachs’ Andrew Boak said “over time, this will ease stress on rents in the housing market,” while Morgan Stanley’s Chris Read said it will ease “acute” stress on the rental market.
Prashant Newnaha of TD Securities said any effect on the economy could become apparent towards the end of this year or early 2025. However, he warned that tightening restrictions would not be a “silver bullet” to the country’s persistent inflation problem.
“Unless net migration, that is, housing and construction, is targeted, there is likely to be little relief in housing inflation,” said S. Newnaha. Additionally, as cost-of-living measures are lifted, inflation will most likely increase. There are few simple victories.
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Increases across the board of Deep Leads’ resources: quality, tonnage and target area ABx Group has reported a 30% increase in its mineral resource estimate (MRE) at Deep Leads’ rare ion adsorption clay (IAC) earth deposit in northern Tasmania. The accumulation in MRE comes from 36 tested outlets, representing a significant northward extension for the existing Deep Leads prospect.
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TMG is currently completing work for the planned PFS in early 2023, adding start of drilling in Q3 2022, evaporation testing and permitting activities. The effects of those systems will affect the PFS and any long-term resource upgrades.
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WT Financial Group Limited (WTL) is a diversified money company in development, founded in 2010 and indexed to the Australia Securities Exchange (ASX) in 2015. Their recommendations and product offerings are primarily provided through an organization of independent money advisors who act as legal representatives. of WTL under its broker organization businesses Wealth Today Pty Ltd (Wealth Today) and Sentry Group Pty Ltd (Sentry Group). He has approximately 275 advisers at over two hundred money advisory firms across Australia. It also operates a direct-to-consumer operation under its Spring Financial Group brand.
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