Illustration: Rebecca Zisser/Axios

Australia hasn't had a recession in 27 years, but economists, market analysts and everyday Australians are starting to worry that things are taking a turn for the worse.

Driving the news: The Reserve Bank of Australia on Tuesday decided not to cut interest rates, which are already at the lowest level in the country's history, holding steady for the 30th meeting in a row. But many expect that it's only a matter of time.

  • "The economy faces a lot of headwinds," Richard Franulovich, head of FX Strategy at Westpac, tells Axios.

Among the most pressing are a declining property market, weak consumer spending, depressed business sentiment and perhaps most pernicious, "the economy is just not generating enough inflation," Franulovich adds.

Details: The country's CPI in March fell to 1.3%, moving further away from the central bank's target of 2–3%. (Inflation hasn't hit 2% since June, which was just the second time since 2014.) Unemployment has picked up and remained stubbornly above 5%.

  • The Australian dollar has been weak against the U.S. dollar and is trading near its lowest level since 2016.
Expand chart
Data: Federal Reserve Bank of St. Louis and Reserve Bank of Australia; Chart: Chris Canipe/Axios

What's next: The flurry of economic weakness has investors pricing in a rate cut by July, but the RBA on Tuesday pointed not to a typical 25- or even 50-basis-point cut but potentially taking rates all the way to 0.

  • Bank of America analysts say its likely Australia will also get a jolt of fiscal stimulus from a new government no matter which party wins the May 18 general election.
  • During Australia's 27-year recession-free run, the RBA has generally held rates higher than the U.S. Federal Reserve, as you can see in the chart above.

The bottom line: Australia has benefited significantly from China's rise, as a major supplier of iron ore and other raw materials to the country. But China's import economy is clearly showing down, evidenced by data Wednesday showing Chinese imports fell for a fifth straight month.

  • With the trade war between the U.S. and China again bubbling, Australia likely will need all the stimulus it can get.

Go deeper: The world can't afford a trade war right now

Go deeper

Deadly Hurricane Zeta churns inland after lashing Louisiana

A satellite image of Hurricane Zeta. Photo: National Hurricane Center/NOAA

Hurricane Zeta has killed at least one person after a downed power line electrocuted a 55-year-old in Louisiana as the storm moved into Alabama overnight.

What's happening: After "battering southeastern Louisiana and southern Mississippi," it began lashing Alabama late Wednesday, per the National Hurricane Center.

36 mins ago - World

Taiwan reaches a record 200 days with no local coronavirus cases

Catholics go through containment protocols including body-temperature measurement and hands-sanitisation before entering the Saint Christopher Parish Church, Taipei City, Taiwan, in July. Photo: Ceng Shou Yi/NurPhoto via Getty Images

Taiwan on Thursday marked no locally transmitted coronavirus cases for 200 days, as the island of 23 million people's total number of infections reported stands at 550 and the COVID-19 death toll at seven.

Why it matters: Nowhere else in the world has reached such a milestone. While COVID-19 cases surge across the U.S. and Europe, Taiwan's last locally transmitted case was on April 12. Experts credit tightly regulated travel, early border closure, "rigorous contact tracing, technology-enforced quarantine and universal mask wearing," along with the island state's previous experience with the SARS virus, per Bloomberg.

Go deeper: As Taiwan's profile rises, so does risk of conflict with China

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

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