Cairns Report - May 2024

The economic landscape presents a mix of factors. On one hand, property prices continue to increase, and the upcoming Cost-of-Living relief announcements expected in the Federal Budget (scheduled for May 14) could potentially exacerbate inflationary pressures.

With inflation showing slower decline than anticipated last quarter, economists are revising down the likelihood of the Reserve Bank of Australia (RBA) cutting interest rates later this year. This adjustment is slightly dampening business confidence, as the anticipated relief from lower interest rates may either be postponed or be of a smaller magnitude.

On the flip side, concerns arise from a weakening Chinese economy and falling commodity prices, which might lead to a reduction in State and Federal tax revenue, potentially reducing government spending. Additionally, the combination of high interest rates, the expiration of business tax incentives, and the ATO’s tough stance on outstanding debts could collectively hinder economic activity.

At present, it appears that we are likely to remain in a holding pattern, observing which narrative unfolds first.

Read the full report Cairns Report May 2024