Stagflation: is Australia heading back to the 1970s? Our economics and business writers go head to head

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The economy has stalled and inflation remains high. Should we be worried? Guardian Australia’s experts have very different views

In light of the latest GDP figures, is there a risk Australia’s economy could become stuck in a rut with high inflation and unemployment and no growth?In light of the latest GDP figures, is there a risk Australia’s economy could become stuck in a rut with high inflation and unemployment and no growth?Should inflation remain resistant to further falls, the bank’s governor, Michele Bullock, has said the RBA won’t hesitate to hike interest rates again – knocking more wind out of the economy.

For one thing, Australia – and other major economies – have independent central banks now precisely to guard against a return to entrenched high inflation. Quarterly headline inflation in Australia peaked at 7.8% at the end of 2022 – well shy of theThe jobless rate averaged 1.9% in the three decades or so to 1974. It soared to an average 7.6% in the 2o years afterwards,Annual GDP growth might be ticking along at a meagre 1.

Sign up for Guardian Australia’s free morning and afternoon email newsletters for your daily news roundup Yes, that might look a bit like stagflation. But at that point, collapsing real estate, stock and other asset markets – not to mention possible war mobilisation – might make the issue of stagnant growth and Bunnings being deprived of Chinese-made goods the least of our worries.Our Australian morning briefing breaks down the key stories of the day, telling you what’s happening and why it mattersThe well-known fable about a frog not noticing it is being boiled alive is appropriate.

We’re at the end of the first push to bring inflation under control, and we are seeing glimpses of a recession on the horizon.

 

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