Australia Economic Forecast

Australia Economic Outlook

January 23, 2018

The economy looks to have been in solid shape heading into the new year. Retail sales perked up considerably in the first two months of Q4 after a soggy Q3, while employment growth was elevated in December. The robust labor market is likely fueling consumer confidence, which hit a multi-year high in January. On the downside, the residential property market has softened—particularly in Sydney—following the introduction of macroprudential measures, while wage growth remains fairly limp. This comes after a third quarter economic performance which saw healthy fixed investment, partially offset by sluggish private consumption growth. In December, the government presented its mid-year economic and fiscal outlook. It now expects a smaller budget deficit in 2017¬–2018 than previously anticipated, thanks to improved tax collection and firms’ higher profitability. The government also judged that it was still on track to meet its target of returning the budget to surplus by 2020–2021.

Australia Economic Growth

Economic growth should pick up this year, boosted by loose monetary policy, a rebalancing towards non-mining sectors and stronger LNG exports as new projects come onstream. Slow wage growth and high levels of household debt will, however, continue to weigh on growth. FocusEconomics panelists expect GDP to expand 2.8% in 2018, up 0.1 percentage points from last month’s forecast, and 2.7% in 2019.

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Australia Facts

Bond Yield2.851.47 %Feb 14
Exchange Rate0.790.05 %Feb 14
Stock Market5,9400.08 %Feb 14

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