HSBC puts Australian recession risk at 50:50 as rates rise

Summarised from 2 outlets · 3 reports · Updated 30 Oct, 05:09 · Archive

HSBC's chief economist warns Australia faces a 50 per cent chance of recession if interest rates rise further.

HSBC chief economist Paul Bloxham has warned that Australia faces a 50 per cent chance of recession, particularly if another interest rate rise occurs. He said the Reserve Bank is expected to raise rates again, which could push an already cooling economy into contraction in the December and March quarters.

Bloxham identified the housing market as the main driver of economic risk. He noted that as house prices fall following recent rate rises and policy changes, sellers are reluctant to sell into a weakening market and buyers are hesitant to purchase, stalling new home sales and the associated economic activity.

However, the Reserve Bank's chief economist Sarah Hunter dismissed recession concerns, telling a senate inquiry that monitoring of real economy indicators shows no sign the economy is heading into recession in the near term. Bloxham said the two organisations simply had different interpretations of the data.

Australia's last recession was in 2020 during COVID lockdowns. A technical recession is defined in Australia as two consecutive quarters of negative GDP growth.

HSBC puts Australian recession risk at 50:50 as rates rise — Image: Perth Now

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How it is being reported

HSBC warns rate hikes and cooling housing market could plunge Australia into recessionThe odds of Australia falling into recession at 50 per cent, as a key driving force behind the economy slumps due to rising rates.Perth Now · 30 Oct, 04:51
HSBC warns rate hikes and cooling housing market could plunge Australia into recessionThe odds of Australia falling into recession at 50 per cent, as a key driving force behind the economy slumps due to rising rates.The West Australian · 30 Oct, 04:50
HSBC now rating an Australian recession as a 50:50 chanceA British bank now says another rate rise could see Australia suffer a fate last seen in 1991.The West Australian · 30 Oct, 02:41

In this story: HSBC · Paul Bloxham · Australia · Reserve Bank of Australia · Sarah Hunter

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