Economy set to worsen, with higher unemployment and weaker growth on the way, Jim Chalmers reveals

Treasurer Jim Chalmers has announced that December’s mid-year budget update will forecast weaker growth and higher unemployment, as economists predict a challenging six months ahead for the Australian economy.

In a speech on Friday morning, Chalmers stated, "higher inflation is putting people under pressure, tighter monetary policy is weighing on domestic activity, and we can see that in the softening of the labour market." He emphasized that Treasury is currently revising all economic projections for the mid-year update.

Chalmers noted, "Higher interest rates and higher inflation are likely to mean softer growth and slightly higher unemployment." This announcement comes just two days after a senior Reserve Bank official hinted at the possibility of another interest rate hike in less than two weeks.

The Albanese government is already facing backlash from its ambitious tax reforms, and the deteriorating economic situation is expected to further impact Labor and Chalmers’ popularity as the new year approaches. Recent data revealed that unemployment reached 4.7% in September, the highest level in nearly five years.