A leading Australian economist has warned the \u201cclock is ticking\u201d on a recession as an \u201cinflation mentality\u201d floods the nation\u2019s economy.<\/p>\n
AMP economist Shane Oliver predicts Australia is on the doorstep of a recession as fuel and fertiliser becomes more expensive and scarce each day the Strait of Hormuz is closed.<\/p>\n
\u201cIt\u2019s like a the clock is ticking basically and it has been ever since the Strait of Hormuz effectively closed at the start of the war,\u201d Mr Oliver told Seven\u2019s Sunrise.<\/p>\n
\u201cAnd the longer this goes on, the longer the flow of oil out of the Strait is delayed or stopped, then the risk of recession grows in Australia.<\/p>\n
\u201cRight now we\u2019ve seen the price effects gone up. That\u2019s horrible, but it\u2019s probably not enough to give us a recession.<\/p>\n
\u201cThe recession could come if we actually start to run low on fuel, and therefore we have to restrict our usage.<\/p>\n
\u201cThat then has an economic impact and potentially knocks us into recession through the second half of this year.\u201d<\/p>\n
The crucial Strait of Hormuz has been effectively closed since February 28, putting a chokehold on a large portion of the world\u2019s oil supply. <\/p>\n
Fuel companies hiked prices in Australia as the conflict began, forcing the federal government to temporarily slash the fuel excise tax and also commit to underwriting fuel shipments for the private sector.<\/p>\n
The Strait is an export outlet for about one-third of the world\u2019s raw fertiliser components, including 20 per cent of natural gas \u2013 used to make fertiliser too \u2013 and 20-25 per cent of the world\u2019s maritime oil trade.<\/p>\n
Westpac is among banks predicting the RBA will make a third, fourth and fifth interest rate hike this year to combat inflation which was already above its target before the start of the US\/Iran war.<\/p>\n
Once the forecast rate hikes are enacted in the coming months, Mr Oliver predicts a weakening Australian economy will then need interest rate cuts.<\/p>\n
\u201cAs the economy slows down, if there isn\u2019t an immediate reopening of the Strait of Hormuz, then of course, we\u2019ll start to see the Reserve Bank refocus on weaker economic growth,\u201d he said.<\/p>\n
\u201cAnd then as we go through next year, it\u2019s quite likely we\u2019ll be seeing rate cuts.\u201d<\/p>\n
The Reserve Bank defines a recession as a period of weak or negative economic output coupled with a significant rise in unemployment.<\/p>\n
One widely-used barometer is two consecutive quarters of negative growth in real (adjusted for inflation) gross domestic product. Over the past three quarters \u2013 ending December 2025 \u2013 Australia\u2019s per capita GDP has risen 0.5 per cent, 0.1 per cent, and 0.4 per cent.<\/p>\n","protected":false},"excerpt":{"rendered":"A leading Australian economist has warned the \u201cclock is ticking\u201d on a recession as an \u201cinflation mentality\u201d floods…\n","protected":false},"author":2,"featured_media":390873,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[186125,337,972,18126,98874,186133,114,186123,186120,184,186135,186124,186119,85,186129,186122,186121,12980,186134,4486,87,46,186130,36439,92875,186127,186132,20679,163881,186126,186136,148285,21015,44600,186128,168532,186131],"class_list":{"0":"post-390872","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-amp-chief-economist","9":"tag-asia","10":"tag-australia","11":"tag-australia-and-new-zealand","12":"tag-australian-economy","13":"tag-blair-jackson","14":"tag-business","15":"tag-chief-economist-fears","16":"tag-clock-ticking","17":"tag-economy","18":"tag-economy-slows","19":"tag-forecast-rate-hikes","20":"tag-fuel-companies","21":"tag-il","22":"tag-inflation-footing","23":"tag-inflation-mentality","24":"tag-inflation-mindset","25":"tag-interest-rate","26":"tag-interest-rate-hikes","27":"tag-interest-rates","28":"tag-iran","29":"tag-israel","30":"tag-maritime-oil-trade","31":"tag-newswire-business","32":"tag-oceania","33":"tag-price-effects","34":"tag-prominent-economist","35":"tag-rate-cuts","36":"tag-rate-hikes","37":"tag-raw-fertiliser-components","38":"tag-recession-doorstep","39":"tag-recession-fears","40":"tag-reserve-bank-of-australia","41":"tag-shane-oliver","42":"tag-sky-news-senior-reporter-caroline-marcus","43":"tag-southern-asia","44":"tag-weakening-australian-economy"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/390872","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=390872"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/390872\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/390873"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=390872"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=390872"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=390872"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}