Interest rate hikes to make Australian economy one of Asia-Pacific's weakest, report finds

The Australian economy is set to become one of the most sluggish in the Asia-Pacific region in coming years, a new report has found.

Ratings agency S&P Global has predicted that Australia will have the fifth-slowest economy of the 14 major Asian countries this year with a growth of 1.4 per cent.

That's tipped to slow to just a 1.2 per cent expansion next year, the second-slowest in the region ahead of just Japan on 1.1 per cent.

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S&P's analysts have attributed the slowdown to the ongoing high interest rates.

The Reserve Bank of Australia has said that interest rate hikes can take a year to be felt.

S&P is also predicting further rate rises, with a forecast peak of 4.6 per cent in the second half of 2023.

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The lag on the impact of rate rises means that the affect of the earliest of the recent chain of increases, in May last year, might only have been felt recently.

And S&P is predicting the following hikes will make themselves felt in full into 2024.

Consumer spending is slowing already in Australia, with new research from the Salvation Army showing that two-thirds of Australians are struggling to pay their bills.

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