{"id":619978,"date":"2026-10-04T03:30:11","date_gmt":"2026-10-04T03:30:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/619978\/"},"modified":"2026-10-04T03:30:11","modified_gmt":"2026-10-04T03:30:11","slug":"chalmers-says-global-economic-turmoil-will-drive-budget-cuts-but-australia-should-avoid-recession-australian-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/619978\/","title":{"rendered":"Chalmers says global economic turmoil will drive budget cuts, but Australia should avoid recession | Australian economy"},"content":{"rendered":"

Jim Chalmers has warned of \u201cvery substantial and intensifying\u201d economic pressures on the horizon but insists he\u2019s not planning for a recession, as he prepares to find new ways to cut the budget ahead of its mid-year update.<\/p>\n

The treasurer on Sunday called on critics of government spending to name the services that should be cut, as he points the finger at the private sector for driving up inflation in Australia amid the protracted conflict in the Middle East.<\/p>\n

Chalmers said the US-led eight-month war against Iran, which has severely curtailed global oil supplies from the region, has been \u201cdisastrous\u201d for cost-of-living pressures.<\/p>\n

He also said there was \u201cvery substantial and intensifying pressure\u201d on the federal budget.<\/p>\n

\u201cNo serious observer of what\u2019s going on right now would conclude anything other than [that],\u201d he told ABC\u2019s Insiders. \u201cThe longer this thing drags out, the bigger the impact on the global economy and on the Australian economy<\/a>, whether it\u2019s \u2026 on inflation or downward pressure on growth.<\/p>\n

\u201cWe\u2019re not anticipating [a recession] here in Australia, but certainly it is weighing on global growth, and we\u2019re not immune from that.\u201d<\/p>\n

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Inflation has jumped to 4% in the year to August, from 3.5%, while the Reserve Bank lifted its key interest rate<\/a> to 4.6%, the highest figure since 2011.<\/p>\n

Chalmers said the government was working on finding further savings to the budget in the mid-year economic and fiscal outlook, due in December, after cuts of $44.9bn over four years were identified in the May budget.<\/p>\n

The treasurer said cuts to government spending weren\u2019t the only factor driving up inflation in the economy, and cutting larger sums would impact essential services.<\/p>\n

\u201cIf people don\u2019t want us to strengthen Medicare, for example, or cut income taxes, or provide cost-of-living relief in other ways, then they should nominate where that should be cut,\u201d he said on Sunday.<\/p>\n

Beyond the war\u2019s impact on driving up prices in Australia, Chalmers said the private sector was partly to blame.<\/p>\n

\u201cFor every $5 of demand in our economy, $1 is public, $4 is private,\u201d he said.<\/p>\n

\u201cBudget settings are not the primary driver of prices in our economy. There\u2019s a whole bunch of other things going on.\u201d<\/p>\n

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But the shadow treasurer, Tim Wilson<\/a>, said Chalmers should be sacked, claiming his decisions have increased inflation to generate tax windfalls.<\/p>\n

\u201cHe\u2019s actively stoked inflation, and he\u2019s fundamentally undermined the success of this country, and now he\u2019s announced today he\u2019s on a sort of Argo-style salvation trip for investment, because he\u2019s created a problem of sovereign risk,\u201d he told News24.<\/p>\n

The assistant science and digital technology minister, Andrew Charlton, said the consequences of having a recession, which would ease inflation, would be devastating.<\/p>\n

\u201cIf you have a recession, you throw hundreds of thousands of people on to the unemployment queues, and that pulls a huge amount of demand out of the economy,\u201d he told News24.<\/p>\n

\u201cIt\u2019s pretty easy to have low interest rates and low inflation if your economy goes through a recession.<\/p>\n

\u201cAs a Labor government, that is a big priority for us to make sure that we don\u2019t go into a recession that drives a lot of people into unemployment.\u201d<\/p>\n

Chalmers will travel to Japan for meetings with business leaders and the country\u2019s finance minister, in an effort to boost investment and improve fuel security.<\/p>\n","protected":false},"excerpt":{"rendered":"Jim Chalmers has warned of \u201cvery substantial and intensifying\u201d economic pressures on the horizon but insists he\u2019s not…\n","protected":false},"author":2,"featured_media":619979,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-619978","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/619978","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=619978"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/619978\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/619979"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=619978"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=619978"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=619978"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}