Global ratings agency Moody’s Investor Service on Monday warned all advanced economies would struggle in the coming year.

It said that this year Australia,Japan and South Korea would be the only nations among the world’s major economies to escape a recession caused by falling consumer demand caused by high interest rates and inflation.

According to Moody’s,a global shortage of workers would ease in line with the slowing economy,but a recovery next year would again put pressure on businesses to find enough staff.

Small and medium-sized businesses are also preparing for a tough 12 to 18 months.

A survey by business management platform company MYOB found 48 per cent of businesses want the budget to deliver cost of living relief,compared to 31 per cent who want less red tape and 30 per cent who want a cut in the company tax rate.

More than a third of businesses said their top pressure was the cost of utilities,with 34 per cent ranking fuel prices as their most pressing concern while 32 per cent ranked interest rates.

The survey,of 1000 small and medium-sized firms,found 44 per cent expect a recession within the coming year.

“While they’re still showing signs of resilience,increasing rates and input costs will only make operating a business harder for the country’s 2.4 million SMEs.”

Chalmers will use the budget to announce more policies to help lift home building construction across the country.

Data from the Australian Bureau of Statistics released on Monday showed a 0.1 per cent drop in dwelling approvals through March. Over the past 12 months,approvals have fallen by 17.3 per cent.

In trend terms,approvals are now at their lowest level since 2009.

BIS Oxford Economics senior economist Maree Kilroy said the start of 2023 had been poor for the building sector and may require more government assistance.

“A protracted downturn for dwelling approvals is forecast that extends through 2023 and into 2024. We believe the probability of government intervention to support housing supply is increasing,” she said.

HSBC Australia chief economist Paul Bloxham,who is forecasting economic growth to slow to 1.25 per cent through 2023-24,said both the government and Reserve Bank were largely working together to deal with the economy’s inflation pressures.

Bloxham,who expected Chalmers to reveal a budget surplus for the current financial year,said there would be dangers from the government spending too much money.

“Fiscal policy has a difficult balancing act in this environment – supporting parts of the economy that need it,while attempting to not add to the inflation challenge,as that will likely result in higher interest rates,slower GDP growth,and a worse off fiscal position,” he said.

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