Donald Trump is ‘the biggest threat’ to our economy and our jobs, says Daniel Mookhey

The budget will confirm a run of five consecutive deficits for New South Wales since 2019-20 that will continue into the next financial year, but Mookhey said there would be “no blanket round of cuts” to bolster the results.

Many economists share Mookhey’s concerns about how changes in U.S. trade policy will affect the global economy should Trump return as president.

During his first term, Trump’s policies sparked damaging trade conflicts between the United States and other countries, especially China, that roiled financial markets and cast a shadow over the rules-based international trading system built over decades.

The presumptive Republican nominee has signaled tighter trade restrictions if elected again, including a 10 percent tariff on all imports from all countries, as well as a tax of up to 60 percent on imports from China. If implemented, those policies would likely trigger a new round of trade wars, disrupt international trade and limit global growth.

Mookhey warned that New South Wales is now at a “tipping point” where the problem of high inflation is beginning to ease following a series of interest rate increases in 2022 and 2023. Instead, the state faces a period of very low growth.

“The RBA has managed to do what it wanted to do, which is to slow the nation’s economic growth to allow inflationary pressures to dissipate,” Mookhey said.

“I think that means the risk balance is now shifting from high inflation to low growth to no growth. “This means that the budget has to be prepared to support the economy in scenarios in which it is completely foreseeable that inflation will persist for a longer time, but it is equally foreseeable that we will find ourselves with very low levels of economic growth.”

He said the government was preparing for both scenarios.

Employment figures released on Thursday showed unemployment in New South Wales fell to 3.8 per cent in May, from 4 per cent in April. Still, the state’s unemployment rate has been trending upward since last year and is forecast to hit 4.5 per cent next financial year.

A survey released by peak body Business NSW last month showed business confidence fell ahead of the budget as businesses face high costs, higher interest rates and persistent weakness in consumer spending. It found that one in five businesses statewide planned to cut staff in the next three months.

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