29 February 2024

Second address to the G20 Economic Ministers Forum, São Paulo, Brazil


Global perspectives on inflation and growth

Friends, let’s not mince our words.

The soft landing we seek at home and in the global economy is assumed but not assured.

Yes, global inflation has peaked, issues in the banking system have been well‑contained, and growth in some major economies like the United States has defied expectations.

But since we last met we’ve seen technical recessions confirmed in Japan and the United Kingdom, two good friends and two big and important economies –

Around a quarter of the G20 has recorded a recession or just narrowly avoided one.

This is before the lagged effect of the synchronised tightening of monetary policy is fully‑felt.

While conflict in Europe and the Middle East threatens more disorder and disruption.

Inflation remains our major concern but for most of us the balance of risks in the economy has shifted, is shifting, or will shift before long from inflation to growth.

Australia is neither immune from all of this nor complacent about any of this.

We expect growth in next week’s December National Accounts to be quite weak –

The inevitable consequence of global uncertainty, higher interest rates, and cost of living pressures.

Inflation has moderated substantially in Australia since its peaks in 2022 and the monthly inflation gauge that came out yesterday is further evidence that inflation is moderating in welcome ways – but we’d like it to moderate further and faster.

We face our challenges from a position of strength.

With low unemployment;

Record high participation;

Stronger business investment;

Moderating inflation;

A return to real wages growth;

And a stronger near‑term budget position.

Since our government has come to office we’ve delivered:

Faster jobs growth than any major advanced economy;

The first budget surplus in 15 years, and a second in prospect;

Public debt well below the G20 average.

I realise everyone’s situation is different –

But I think we can find common cause and clarity in three areas of action:

Relief – by which I mean relief from cost of living pressures designed in ways that takes the pressure off inflation rather than add to it;

Repair – of our budgets and balance sheets, and our supply chains; and

Reform – that prioritises the energy transformation, labour markets and human capital, data and digital technology, and making our economies more dynamic, productive and competitive.

In addition to these three Rs, these three principles we should organise around, I want to make a more specific proposal as well which is timely and topical.

Critical minerals industries and supply chains are not reliable enough or sustainable enough.

Right now, we don’t have the right market structures to reward global producers that improve their environmental and social footprint.

We should look to reward sellers that invest in improving the quality and sustainability of critical minerals.

This should include consideration of a differentiated international trading market for resources produced to higher ESG standards.

This is one specific way we could advance a common agenda for relief, repair and reform under the presidency of our Brazilian friends.