With the release of the Reserve Bank of Australia’s (RBA) latest Statement on Monetary Policy last week, the media focus was swiftly placed squarely upon the RBA’s forecast that productivity growth would be anaemic 0.7% per year on a long-term time horizon.
But buried in the RBA’s lengthy forecast table was perhaps an even more surprising prediction of the nation’s economic future: that unemployment would remain at 4.3%, just slightly above the current level of 4.2%, until the conclusion of the forecast period at the end of 2027.
Given the challenging backdrop of global trade tensions and the labour market consensus being surprised to the downside recently in Australia, Canada, and the United States, this seems rather optimistic.
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