While the RBA left interest rates on hold last Tuesday, many Australians remain unsure about what the next 12 months will look like. Global uncertainty, particularly in Europe and the United States, has led some experts to speculate that Australia may indeed be heading towards a recession.
Alex Cook, founder of Wealth With Purpose, recently joined us on 20Twenty to share his thoughts on the complex issues affecting world economies today. From war in Ukraine to Australia’s GDP, Alex believes that we are currently witnessing a gradual slowdown.
‘In the US particularly,’ says Alex, ‘they’re starting to really feel the pinch from what they call a credit crunch. That’s where the availability of credit starts to dry up. And we’re also starting to see downward valuations in commercial properties. I think that’s something we will also see in Australia in the first half of next year.’
Over the last several years, Australia has had the luxury of low unemployment, but the effect of 10 consecutive interest rate rises is being felt. Then there are those who took out fixed rates during Covid that are about to expire. ‘Some of those loans will go from 2% to 6%,’ says Alex, ‘and that’s obviously going to have a big impact on people’s day to day budgets.’
The Australian Government, like many others around the world, uses GDP (gross domestic product) to gauge the state of the country’s economy. This is a measure of all the goods and services that are traded, and it’s still increasing at the moment.
Measuring Australia’s GDP
‘However, a much more useful measure for the average Aussie is the GDP per capita,’ says Alex. ‘In other words, you take that same figure and divide it amongst the population. And when you look at that, Australia has a declining GDP per capita.’
Alex believes that when using figures to measure the true state of our economy, it is not fair or accurate to rely only on the GDP. ‘Many Australians, even though they have a job, are now having to get a second job to keep up with the cost of living,’ says Alex. ‘A lot of people are working really hard just to keep food on the table. That’s a challenge.’
As Christians it’s important that in recognising the global issues we are facing, we keep pointing others to the hope we have in Jesus. ‘We need to pray for our leaders,’ says Alex, ‘because at the moment the ideology that’s driving them is disastrous and we will pay a very heavy price unless we turn it around soon.’
Now is not the time for Christians to back off. ‘This is the time when we need to be really engaging with society, engaging in these discussions and praying for leaders. Because it’s not going to get any better unless we do something about it. We need God’s help in all of this.’
Listen to Alex’s full interview on 20Twenty below: