Australian economy 'finely poised' as borrowers feel impact of 'unnecessary' rate rises | Kanebridge News
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Australian economy ‘finely poised’ as borrowers feel impact of ‘unnecessary’ rate rises

The latest Deloitte Access Economics report predicts growth to slow to lowest levels since the recession of the early 1990s

By KANEBRIDGE NEWS
Tue, Apr 18, 2023 9:11amGrey Clock 2 min

The past two interest rate rises by the RBA were unnecessary, a new report released by Deloitte Access Economics today has said.

Lead author and Deloitte Access Economics Partner Stephen Smith said in the business outlook report that the Australian economy is now ‘finely poised’ as economic growth slows to a trickle this year, the weakest since the recession of the  early 1990s, outside pandemic conditions.

“Our view remains unchanged – the additional 50 basis points of increases earlier this year were unnecessary, and have prompted a further downgrade in Australia’s growth outlook,” Smith said. “That downgrade is centred on our households, and a ‘consumer recession’ is now forecast in 2023, with household spending expected to finish the year below where it started.”

While he said many mortgage holders were in a position to weather the interest rate rises, which will mean an increase in payments of $14,000 for a $600,000 when lenders pass on the full increases, a significant group were not. He said as many as 15 percent of variable rate, owner-occupier mortgage holders could be in negative cash flow by the end of 2023.

“On these numbers, at least 300,000 Australian households may currently be experiencing negative cash flow, with mortgage repayments and essential living expenses together exceeding household disposable income,” Smith said. “That should shock all of us.”

Smith said the pressures on the construction will also continue to impact the rental market, with commencement on new dwellings expected to be the lowest in a decade.

“Construction is expected to commence on significantly fewer houses and apartments compared to previous years – in fact, Deloitte Access Economics expects that 2023 will see construction commence on the fewest dwellings in more than a decade and almost 70,000 below the level commencements recorded in 2021,” Smith said. 

“On these numbers, new housing supply would just barely keep pace with population growth, let alone ease what is a critical undersupply. In short, we are building far too few dwellings and, with a myriad of supply side challenges unresolved, that is unlikely to change in the near term.”

Deloitte Access Economics has revised expectations for economic growth down to 1.5 percent for this year and just 1.2 percent for 2024. 



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UAE Initiates State-Owned EV Charging Initiative to Boost Electric Vehicle Acceptance

The United Arab Emirates is improving its electric vehicle infrastructure with a new government-owned EV charging network.

Wed, May 22, 2024 2 min

The UAE Ministry of Energy and Infrastructure (MoEI) alongside Etihad Water and Electricity (Etihad WE) have collaborated to form UAEV, a new joint venture aimed at strengthening the electric vehicle (EV) charging framework throughout the UAE. This venture is the first EV charging network entirely owned by the government, aimed at broadening access to EV charging facilities across the country.

The project seeks to revolutionize the UAE’s transport sector by enabling broader adoption of EVs via a robust and widespread charging infrastructure. This initiative is expected to strengthen communities, generate employment, and promote eco-friendly transportation options.

Suhail bin Mohammed Al Mazrouei, Minister of Energy and Infrastructure, said: “UAEV embodies the power of partnership between government and industry, and aims to provide vital electric vehicle infrastructure to boost adoption of EVs, energize communities, and unleash the economic potential of the UAE.

“We hope that this partnership will further accelerate the transition to cleaner transportation and significantly reduce emissions from the transportation sector, thereby helping to bring our Net Zero 2050 Strategy within reach.”

Sharif Al Olama, who has been appointed Chairman of UAEV, said: “In 2023, we saw a rise in EV adoption in the UAE. By expanding our EV infrastructure, we ensure the country is equipped to support those who have already purchased an EV and make the prospect of switching to EV attractive.

“Together, MoEI and Etihad WE form a powerful force that can help future-proof the UAE and achieve the twin objectives of economic growth and climate action, which underpin UAEV.”

The UAEV is also a perfect platform for Etihad WE, the largest employer in the Northern Emirates and a company with a customer base of over 2 million households, to use its core competency and enhance its product offering.

Yousif Ahmed Al Ali, CEO of Etihad Water and Electricity and Board Member of UAEV, explained: “It is part of a deliberate strategy to diversify our operations, using the knowledge and experience acquired from our role as long-standing pioneers in the energy sector, to explore new products, services, projects, and investments which will benefit our customers.

“UAEV charging infrastructure will contribute to the modernization of the UAE’s transport network, help energize communities by creating new jobs, and empower our customers to make more sustainable choices.”

 

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