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Flat White

Why an Australian recession is almost guaranteed, even in a benign world

4 April 2023

4:00 AM

4 April 2023

4:00 AM

In 2019, Australia’s economy was stalling. House prices were declining even though mortgage rates were only about 3.25 per cent. Policymakers, who seemed to act in the belief they could outwit the business cycle forever, responded as they had for the past three decades. They doubled-down on the country’s consumer-debt-driven economic model.

The specifics were that Australia’s banking regulator eased the ‘stress test’ on new loans.

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