on air now

Two thriving sectors will save us from recession — but it might feel like one

It’s unlikely Australia will hit a recession in the near future — but it might feel like one.

That’s the assessment of one of Australia’s leading money minds as the nation’s all-important housing continues to dip.

There was a clearance rate of only 44 per cent on the weekend and, according to the OECD, a collapse of the housing market is the biggest threat to our economy.

Stephen Koukoulas, a former Treasury adviser and now the managing director of Market Economics, said a complete recession is unlikely, but conceded many Australians will do it tough.

“It’s going to feel a bit uncomfortable for many people, and probably for some parts it will feel like a recession, even if the big picture data doesn’t show that,” he told Neil Mitchell.

“A recession requires just about everything in the economy to go wrong, and we do have a couple of little segments in the economy that are hanging in there,” he said, listing infrastructure spend and the export sector as the shining lights.

Koukoulas also found the positive in falling house prices.

“The thing to remember about this fall in prices the past 12 month or so, is the Reserve Bank wanted it to happen,” he said.

“They were worried the boom in prices was freezing out first home buyers, it was leaving borrowers to take unnecessary risks.

“We’re in this grey area now — do we want to see it fall much further? Probably not. Do we want to see it stabilise? Probably, because that will mean the economy will probably be a bit stronger in 2019.”

Click PLAY to hear expert analysis from Stephen Koukoulas