We’re not out of the woods quite yet, but Australia’s 2022 economic forecast brings hope, says Kym Nitschke.
A hope-filled 2022
The new year looks set to be brighter than 2021, but only slightly, according to predictions by the Organisation for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF).
Australia’s GDP is expected to increase to 4.1%, up from the original figure of 3%, according to the World Economic Outlook report published by the IMF.
A double whammy of states reopening and vaccination roll-outs contributed to this more positive economic projection.
Businesses and citizens can start to breathe a sigh of relief as this signals good news. A recovering economy should translate into better business opportunities, job certainty, increased consumer spending and overall optimism.
Despite what could or couldn’t happen, it’s critical to get on top of your finances to ensure you are well prepared for the future.
Reopening signals economic rebound
Nationwide lockdowns have made it difficult to understand the economy’s health as citizens, businesses and governments navigate the unstable landscape. Extended lockdowns, an erratic supply chain and job insecurity are just some of the things Australian consumers have had to contend with.
These factors, among others, contributed to the IMF downgrading Australia’s economic growth in 2021 by 1%, from 4.5% to 5.3%.
But the news isn’t all doom and gloom as business and consumer confidence returns and 2022 economic projections indicate better days to come.
A positive outlook
Australia’s economy fares better than most OECD countries. According to the intergovernmental economic organisation report, rising income and consumer demand, coupled with a decreasing unemployment rate, will push up the country’s growth rate. See the OCED report here.
And even though the inflation rate is set to rise by 2.1% in 2022, this won’t be a significant concern as, so far, there are no warning signs for continued rising inflation rates over the long term.
Other encouraging news to hold on to is that the OCED is forecasting strong year-on-year growth for Australia until 2026.
Housing market remains vulnerable
The housing market has been impacted by the pandemic in somewhat surprising ways.
Soaring house prices in Adelaide and Australia-wide due to low-interest rates, favourable government incentives, low stock and rising consumer demand made things tough for buyers, but great for sellers. As regulators move to cool down the market by putting pressure on the banks, home owners and investors need to get advice about their personal strategy.
It’s best to work closely with your financial adviser and accountant before making moves in the property market in 2022.
Plan for the unpredictable
Australia is made of tough mettle and proved it has a resilient economy.
As we move further away from the day-to-day difficulties of the pandemic and lockdowns, it i now an important time to review your financial health, including any investments or businesses you are involved in.
A robust wealth plan helps you to weather any unpredictable storms that may come your way.
Don’t delay getting advice about this matter. Contact us now.
The information contained on this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nitschke Nancarrow’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.Tags: Australia, Economy