Australia Economic Forecast

Australia Economic Outlook

May 22, 2018

The economy entered the second quarter on solid footing, supported by rising business confidence and positive, albeit easing, consumer sentiment. Data for the first quarter shows that activity expanded at a solid and broadly stable pace after losing some steam in Q4 due to the completion of large mining projects. In Q1, retail sales continued to increase at a healthy pace, underpinned by solid labor market conditions, subdued inflation and positive consumer confidence. Moreover, non-mining private investment likely expanded at a robust pace, as suggested by upbeat business confidence. On 1 May, Fitch Ratings affirmed Australia’s credit rating at AAA with a stable outlook, citing the country’s solid fiscal parameters, successful governance and macroeconomic stability. In the political arena, on 8 May the government presented its budget for fiscal year 2018/2019. The budget includes measures such as income tax cuts for low- and middle-income earners, which could boost retail sales in H2.

Australia Economic Growth

This year, rising non-mining business investment and public infrastructure spending should support growth. Moreover, resilient global demand and increased exports of liquified natural gas are expected to boost overseas sales. However, Australia’s bulky external debt leaves it exposed to potential capital outflows, while high levels of household debt represent a risk to financial stability. Met the why particular panelists expect GDP to expand 2.7% in 2018, which is unchanged from last month’s forecast, and 2.7% again in 2019.

Australia Economy Data

20132014201520162017
Population (million)23.323.623.924.324.8
GDP per capita (USD)64,85761,36251,36351,878-  
GDP (USD bn)1,5111,4491,2301,260-  
Economic Growth (GDP, annual variation in %)2.12.82.42.5-  
Consumption (annual variation in %)1.72.82.72.6-  
Investment (annual variation in %)-1.6-1.6-3.0-2.6-  
Exports (G&S, annual variation in %)5.86.96.07.9-  
Imports (G&S, annual variation in %)-2.2-1.12.00.2-  
Industrial Production (annual variation in %)1.14.01.21.0-  
Retail Sales (annual variation in %)3.25.54.53.7-  
Unemployment Rate5.76.16.15.7-  
Fiscal Balance (% of GDP)-1.9-2.8-2.2-2.1-  
Public Debt (% of GDP)30.834.237.641.1-  
Money (annual variation in %)8.76.311.96.5-  
Inflation Rate (CPI, annual variation in %, eop)2.81.71.71.5-  
Inflation Rate (CPI, annual variation in %)2.52.51.51.3-  
Inflation (PPI, annual variation in %)1.61.71.40.9-  
Policy Interest Rate (%)2.502.502.001.50-  
Stock Market (annual variation in %)14.80.7-0.87.0-  
Exchange Rate (vs USD)0.890.820.730.72-  
Exchange Rate (vs USD, aop)0.970.900.750.74-  
Current Account (% of GDP)-3.2-3.0-4.8-2.6-  
Current Account Balance (USD bn)-48.2-43.7-59.4-33.4-  
Trade Balance (USD billion)20.311.9-13.13.1-  

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Australia Facts

ValueChangeDate
Bond Yield2.891.47 %May 21
Exchange Rate0.750.05 %May 21
Stock Market6,1900.08 %May 21

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