Australia Economic Forecast

Australia Economic Outlook

February 19, 2019

Survey-based indicators give mixed signals on the performance of the economy at the start of 2019. This follows a fourth quarter during which a buoyant external sector appears to have supported growth, counterbalancing soft domestic demand. Looking at the dim showing of retail sales and given the notable fall in house prices in Q4, it seems weak consumer spending dynamics carried over into the quarter; solid job creation and recovering consumer confidence, however, could support private consumption going forward. Meanwhile, a notable decline in business confidence and a sharp fall in dwelling approvals in the same period point to unremarkable business activity. That said, liquified natural gas capacity coming online and rising coal and iron production caused exports to surge in the quarter, likely leading to a pick-up in growth. In other news, Australian bank shares soared in early February, following the release of a report on finance-sector misconduct, which essentially backed the existing structure of the banking system.

Australia Economic Growth

This year, the economy will be underpinned by stronger non-mining business investment on the back of favorable financing conditions and robust commodity exports. However, growth will moderate due to shrinking residential and mining investment, and as a prolonged correction in real estate prices coupled with a high debt stock and moderate wage growth restrain consumer spending. Downside risks stem from disappointing growth in China and political uncertainty ahead of May’s elections. Met the why particular panelists expect GDP to expand 2.7% in 2019, unchanged from last month’s forecast, and 2.6% in 2020.

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 Yield2.031.47 %Mar 11
Exchange Rate0.700.05 %Mar 11
Stock Market6,2630.08 %Mar 11

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