Australia Economic Forecast

Australia Economic Outlook

January 22, 2019

Available data suggests the economy regained some steam in the fourth quarter of last year, following a disappointing third quarter in which falling house prices and anemic wage growth restrained consumer spending. In October-November, exports jumped on soaring commodity shipments, benefiting especially from liquified natural gas capacity coming online, while business confidence remained in expansionary territory. Low unemployment levels, solid job creation and strengthening retail sales in the same period point to some recovery in household spending, as does rising consumer confidence throughout Q4. However, November’s retail sales were boosted by Black Friday and Cyber Monday sales, which could result in weaker sales in December. Tumbling house prices in Q4 could also have limited the recovery in spending, while a dive in consumer confidence in January bodes ill for private consumption at the beginning of the year.

Australia Economic Growth

Growth should moderate in 2019, as sluggish wage growth, high household debts and continued property market correction weigh on private consumption, while falling construction activity and mining investment constrain the expansion in fixed investment. However, growth will remain healthy nonetheless, underpinned by rising LNG shipments buttressing the external sector. That said, the volatility of commodity prices and a stronger-than-expected deceleration in growth in China represent clear downside risks. 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 Yield2.241.47 %Jan 30
Exchange Rate0.720.05 %Jan 30
Stock Market5,9510.08 %Jan 30

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