Economist warns Victorians to expect ‘tough medicine’ in 2023

An economist says some “fairly dramatic” factors are putting pressure on the economy at the moment, and Victorians will be in for “a bit of tough medicine” next year.

Managing director of market economics, former economic adviser to Julia Gillard, Stephen Koukoulas, says there’s pain ahead, with recession looming in the US and UK, cost of living pressures and interest rate hikes.

“It’s unusual that they’re all happening at once,” he told Neil Mitchell.

“We’re currently enjoying a really low unemployment rate … I’ve been around long enough to see that that good news can change really quickly.”

With interest rates rising, and high government debt, Mr Koukoulas warned “there will be some need for budget consolidation, and yes, that means higher taxes and lower spending”.

“Whoever wins that (Victorian) election in a couple of weeks time really needs to revisit those budget settings and maybe have a bit of tough medicine for 2023.”

Press PLAY below to hear what Mr Koukoulas says we should expect next year