Government Funds 40% of Employment, Westpac Issues Inflation Warning

Australia’s economy is experiencing a significant structural shift, with government spending now accounting for 35% of domestic output and funding 40% of jobs, leading to increased inflationary pressures. Westpac economist Pat Bustamante notes that this rising public sector demand is straining resources available for the private sector. With forecasts indicating sustained high levels of federal spending, there are concerns about ongoing labour shortages in key sectors. The Reserve Bank of Australia hints at potential interest rate hikes in response to these inflationary trends.

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