Australia Economic Forecast

Australia Economic Outlook

July 17, 2018

The economy remained in good shape in Q2, after accelerating in Q1 on buoyant commodity exports and business investment. Exports continued to perform well in April and May, benefiting from robust demand from China, Japan and South Korea. Moreover, consumer spending seems to have regained some steam in Q2: Retail sales expanded solidly in April and May, supported by healthy job creation and upbeat consumer confidence. However, the outlook for households remains clouded by elevated indebtedness levels and falling home prices; real estate prices continued to dip in June. As housing accounts for over 50% of household assets, a protracted decline in prices could weigh on private consumption. Some support to spending will, however, be provided by the income tax cuts approved by the Senate in mid-June, in a clear victory for the ruling Liberal-National coalition.

Australia Economic Growth

This year, the economy is set to surpass 2017’s growth rate. A positive global environment will support resource exports, while favorable business conditions and supportive monetary policy will buoy non-mining business investment. Household spending should also increase at a solid pace, supported by moderate inflation and solid job creation; however, subdued wage growth, high debt levels and falling house prices will limit the extent of its growth. Met the why particular panelists expect GDP to expand 2.9% in 2018, up 0.1 percentage points from last month’s forecast, and 2.8% in 2019.

Australia Economy Data

20132014201520162017
Population (million)23.323.724.024.424.8
GDP per capita (USD)64,99461,43351,34151,90355,690
GDP (USD bn)1,5161,4541,2331,2661,379
Economic Growth (GDP, annual variation in %)2.22.62.52.62.2
Consumption (annual variation in %)-  -  -  -  -  
Investment (annual variation in %)-1.7-2.0-3.6-2.13.1
Exports (G&S, annual variation in %)5.86.96.56.83.5
Imports (G&S, annual variation in %)-2.0-1.41.90.27.8
Industrial Production (annual variation in %)1.03.70.81.51.1
Retail Sales (annual variation in %)3.25.54.53.72.4
Unemployment Rate5.76.16.15.75.6
Fiscal Balance (% of GDP)-1.2-3.0-2.3-2.4-1.9
Public Debt (% of GDP)30.634.137.811.641.6
Money (annual variation in %)8.76.311.96.55.4
Inflation Rate (CPI, annual variation in %, eop)2.81.71.71.51.9
Inflation Rate (CPI, annual variation in %)2.42.51.51.31.9
Inflation (PPI, annual variation in %)1.61.71.40.91.6
Policy Interest Rate (%)2.502.502.001.501.50
Stock Market (annual variation in %)14.80.7-0.87.07.8
Exchange Rate (vs USD)0.890.820.730.720.78
Exchange Rate (vs USD, aop)0.970.900.750.740.77
Current Account (% of GDP)-3.2-3.2-4.8-3.1-2.5
Current Account Balance (USD bn)-48.5-46.7-59.0-39.2-34.0
Trade Balance (USD billion)20.311.9-13.13.111.0

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Australia Facts

ValueChangeDate
Bond Yield2.661.47 %Jul 17
Exchange Rate0.740.05 %Jul 17
Stock Market6,2880.08 %Jul 17

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