The Actuaries Institute, the peak body for actuaries in Australia, has warned that the country is at risk of a severe recession in the years ahead as economic pain continues to escalate.
In its new report, the Actuaries Institute has outlined three possible scenarios for the Australian economy in the years ahead
The report highlights the need for governments to take action to protect the economy and to cushion the blow of a potential recession. This could include targeted stimulus measures, such as increased public spending on infrastructure and job creation programs, as well as tax cuts and incentives for businesses to invest.
The report also urges caution when it comes to implementing austerity measures, as they can have long-term effects on the economy and can further destabilise an already fragile situation.
The institute alarmingly reveals that all three scenarios result in a significant recession within the next 15 years.
The paper notes that scenario one, which is stagflation (a time of both elevated inflation and unemployment), is a possibility in the current situation given the high costs of energy and food, supply chain issues, and supply chain difficulties.
A major correction in house prices, which have already dropped substantially throughout the country, is the second potential future.
In this case, a hypothetical 30 percent decrease in prices resulting from an overly intense RBA policy, which would in turn have a domino effect on the economy and financial system, is being analyzed.
The final option is to adopt Modern Monetary Theory (MMT), which emphasizes attaining full employment by printing money to fund government expenditure instead of issuing debt.