On Tuesday 16 September, Moir Group welcomed back Paul Bloxham, Chief Economist for Australia & New Zealand and Global Commodities at HSBC, for one of our most popular annual events. Speaking to a packed audience of 150 attendees at Chartered Accountants ANZ in Sydney, Paul delved into the impact of Trump’s disruptive policies on the US economy, the global outlook, and what it all means for Australia.
Trump as a disruptor: Stagflation risk
Paul described Trump as a “real disruptor,” driving rapid policy change and considerable uncertainty. “Tariffs are now at their highest levels since the 1930s — close to 20% — up from just 2% before inauguration,” he said, “affecting not only final goods, but also production inputs.”
He highlighted tightening immigration restrictions, noting that “undocumented workers make up around 6% of the US workforce.” Combined with tariffs, this is driving up costs and fuelling wage inflation.
Paul explained that tariffs, constrained migration, a $4.5 trillion spending program, deregulation, and cuts to public services together create a negative supply shock. This results in weaker growth while inflation rises. The outcome, he said, is a “stagflation” scenario.
In the short term, frontloading of imports ahead of tariff deadlines boosted spending, inventories, and production. “But this effect is already unwinding,” he noted, leaving the economy exposed to weaker growth in late 2024 and into 2025.
Global outlook: Slower growth, shifting dynamics
Paul highlighted that the impact of US policy extends well beyond its borders. “While the US faces a supply shock, the rest of the world faces a demand shock and a reduced ability to sell into the US market,” he explained.
China sits at the heart of this story. Paul said, “China is under pressure to transition to a more consumer-driven model.” This comes as its property sector declines and manufacturing faces overcapacity, especially in electric vehicles, solar panels, and batteries. Yet household wealth tied to property, weak social security, and a shrinking population make that transition difficult.” As a result, China’s growth is likely to be slower and less metals-intensive in the years ahead.
Financial markets are also showing signs of strain. Equity valuations remain high, narrow credit spreads persist, and pressure on US Federal Reserve independence raises the risk of policy missteps, such as premature rate cuts embedding inflation.
Australia’s position: Productivity the missing link
Australia’s direct trade exposure to the US is limited, with only 5% of exports heading there. The bigger story is through China. As China passes “peak steel” and reduces demand for iron ore, coal, and gas, Paul explained that Australia’s two-decade-long resources windfall has largely peaked. “Resource exports grew an extraordinary 750% between 2003 and 2023,” he said. “But that gift is now fading, leaving productivity as the critical lever to sustain growth and lift living standards.”
He emphasised the urgency: “Output per hour worked has been flat since 2016… basically, if you put the same number of hours in now that you did three years ago, you’ve got less output for those hours worked. This is why lifting productivity is absolutely essential.” Paul warned that current GDP growth of 1.8% likely reflects the economy’s maximum sustainable pace without reform.
To address this, Australia needs to focus on:
- Migration: Continuing to support population growth as a driver of economic resilience.
- Productivity: Through stronger competition, a more enabling regulatory environment, and tax reform.
Paul said, “Productivity primarily comes from businesses making change — investing, innovating, applying AI… What we want from policymakers is for them to set the environment for making that change happen… We haven’t had real tax reform since we introduced the GST in 2000.”
Despite these challenges, Paul emphasised that Australia is in a relatively stable position compared with many peers. “With modest debt, a stable labour market, and the right reforms, Australia is well placed to navigate global turbulence,” he said.
Outlook: Challenges, but reasons for optimism
Uncertainty, inflation, and slower global growth will define the near-term outlook. Yet, Australia’s fundamentals remain sound, and Paul urged that the opportunity lies in building productivity-led growth for the next chapter.
“The clear message is that Australia will be okay,” he concluded, “but sustaining prosperity depends on reform and productivity gains.”
Paul Bloxham has been a trusted voice at Moir Group events for many years, offering timely insights into the forces shaping our economy. You can see previous events with Paul here and here. If you would like to stay informed, Moir Group hosts regular events featuring leading experts across finance, economics, leadership, and ESG.
If you have any recruitment needs in your team on a permanent or temporary basis we would be delighted to assist. Contact us here.
Moir Group is a specialist finance, accounting and ESG recruitment company. We cover temporary and permanent roles from Financial Accountant to CFO level. We also recruit Sustainability and ESG positions across all industry sectors.