Of the four engines driving Australia’s post-pandemic recovery, all but commodity prices are spluttering. Government spending, which has more than offset the losses from the Covid-19 recession, is likely to be reined in to repair public finances. Consumption, which has been driven by a combination of pent-up demand and excess savings during lockdowns, is affected by inflation pressures and uncertainty.
Housing – both construction activity and the wealth effect of higher property prices encouraging spending – is now slowing because of the end of subsidies and higher interest rates.
