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Kochie shares financial forecast for 2024

Reviewed by expert, David Koch
4 min read
22 Dec 2023
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As we head into the new year, it’s time to polish off the crystal ball again to predict what’s in store for our economy over the next 12 months.

Compare the Market’s Economic Director, David’ Kochie’ Koch, shares his forecasts for the Reserve Bank of Australia (RBA) shake-up, the probability of a recession, and how the tax cuts will affect the economy.

“Households are under an immense amount of pressure this year, but unfortunately, I don’t think it’s going to get much better in 2024,” Mr Koch said.

“The good news is, it’s not going to get much worse – if you can call that good news.

“Australian borrowers deserve better after the RBA suggested there would be no rate hikes until 2024. How wrong they were!” Mr Koch said.

“Thankfully, the RBA are making a number of changes which I think are going to lead to better decisions and greater transparency”.

RBA shake-up

“The RBA board will meet eight times a year, which is down from the current eleven. That could give homeowners more time to adjust to rate changes rather than having hikes in rapid succession like we’ve seen over the past 18 months,” Mr Koch said.

“The decision-making structure is also going to change: a new nine-member monetary policy board will be set up with six independently appointed experts. These will be people who operate outside the RBA bubble, in the real world who can bring specialist knowledge, insights and forecasts into the mix.

“The RBA also wants to improve the way it communicates with us. This is important.

“There will be a press conference after every rate decision. There will also be a post-meeting statement, which will be issued by the board, not just the governor. All of this is meant to bring the RBA into the 21st century”.

The reforms will come into effect if the government’s Treasury Laws Amendment Bill is passed early next year.

Is Australia heading into a recession?

“I think we will narrowly avoid a recession,’ Mr Koch said. “The 500,000 new customers which have arrived over the last year through the migration scheme has helped keep the economy in the positive… only just.

“But we are at an economic tipping point, where inflation is staying stubbornly high, and an increasing number of companies are now laying off staff. Thankfully property prices are still pretty solid, which makes us feel rich, and those record migration numbers are boosting retail sales.

When will things get better?

“I think we’re at the interest rate peak, and inflation is going to come down pretty rapidly. But I don’t think we’re going get any interest rate cuts anytime soon,” Mr Koch said.

“There’s one date that’s vital for borrowers to put into their diary – the 31st of January is when the Consumer Price Index data comes out for the December quarter. That will be a real clear indicator of where inflation is heading and, in turn, interest rates.

“Unfortunately, cash-strapped borrowers may have to tough it out for at least another six to nine months before there’s any relief coming through rate cuts.

“If you’re concerned about how you’ll afford your mortgage repayments, it’s now more important than ever to make sure you’re on a good rate.

“Comparing and moving home loans can potentially help you save tens of thousands of dollars a year. Shopping around and challenging all price hikes will help us all get through these tough times”.

Game-changing moments

Mr Koch said the stage three tax cuts coming in mid-year could be a game-changer.

“Now there’s absolutely no way the government can back away from these tax cuts because, at the moment, the personal income tax revenue stream for this government is almost at record highs,” Mr Koch said.

“All those wage rises that have come through in 2023 have been great for us, but have also been great for the government because it pushes many workers into a higher tax bracket so that they’re getting a bigger slice of our wage coming through.

“The downside of these tax cuts is people will have more money to spend, which could keep feed into inflation”.

For more information, please contact:  

Natasha Innes | 0416 705 514 | [email protected]

Compare the Market is a comparison service that takes the hard work out of shopping around.. We make it Simples for Australians to quickly and easily compare and buy insurance, energy, and home loans products from a range of providers. Our easy-to-use comparison tool helps you look for a range of products that may suit your needs and benefit your back pocket.

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Written by Natasha Innes

Natasha Innes is a Media and Communications Advisor at Compare The Market. Natasha joins us after working as a journalist at the Courier Mail and Seven News. She graduated from Queensland University of Technology with a dual degree in Business and Journalism majoring in Public Relations.

[email protected]

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