Australia Economic Forecast

Australia Economic Outlook

December 13, 2018

The economy hit the brakes in the third quarter as falling house prices, tightening financing conditions and sluggish wage growth squeezed consumer spending. Nevertheless, according to available indicators, growth should regain some pace in Q4 given that retail sales accelerated, the labor market continued to add jobs in October, consumer confidence improved throughout the quarter, and given the sharp drop in oil prices since early October. Despite the weak showing in Q3, the IMF acknowledged in mid-November that the economy is successfully completing a rebalancing process which follows the end of the commodity price and investment boom, and praised the government’s responsible fiscal strategy. However, the Fund also highlighted household debt as a source of systemic risk and accordingly suggested that the cabinet further strengthens the financial sector’s regulatory framework.

Australia Economic Growth

Solid growth is expected in 2019. A further tightening in the labor market should translate into faster wage growth. This, coupled with moderate inflationary pressures, ought to stoke consumer spending. Moreover, robust demand for commodities will support the external sector while fixed investment is expected to expand, albeit at an modest pace, buttressed by rising non-mining business investment and public infrastructure spending. Uncertainty ahead of May’s election could unsettle investors, however, while softer growth in China and a possible reignition in global trade tensions cloud the outlook. FocusEconomics panelists expect GDP to expand 2.7% in 2019, down 0.1 percentage points 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)30.634.137.840.641.6
Money (annual variation in %)8.76.310.96.55.4
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)20.311.9-13.13.110.0

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Australia Facts

ValueChangeDate
Bond Yield2.451.47 %Dec 12
Exchange Rate0.720.05 %Dec 12
Stock Market5,7270.08 %Dec 12

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