Federal budget warns Australia faces possible economic nightmare scenario

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Australia’s federal budget warns the country could face major economic pressure if conflict in the Middle East continues to disrupt global oil supplies.

The government says billions have already been committed to strengthen fuel security, including plans to secure an extra one billion litres of fuel and invest $7.5 billion into local storage and supply systems.

Treasury has modelled a worst-case scenario where global oil prices surge to US$200 a barrel and remain high for years if the conflict escalates further.

Under that scenario, Australians could face higher living costs, rising inflation and increased unemployment. Inflation could climb above 7 per cent, while unemployment may return to levels last seen during the pandemic.

The budget papers warn ongoing instability in the region could disrupt key trade routes and energy supplies, pushing up prices for fuel, gas, fertiliser and other essential goods.

Treasurer Jim Chalmers said Australia would avoid a recession even in the severe scenario, but admitted the economic impact would still be significant.

Despite the risks, the government remains hopeful global oil prices will ease by next year if tensions stabilise.

Source : 9 News

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