Australia Economic Forecast

Australia Economic Outlook

September 18, 2018

Australia underwent a period of political turbulence at the end of August, which resulted in Scott Morrison, the former treasurer, replacing Malcolm Turnbull as prime minister. The substitution was the outcome of a leadership vote held within the governing Liberal Party, triggered by the conservative wing of the party. Given the ideological stance of the new prime minister, the replacement is unlikely to lead to a significant shift in economic policy until the general election, which is to be held before 18 May 2019. Meanwhile, economic activity likely remained robust in the third quarter following a stronger-than-expected second quarter, in which GDP growth was fueled by surprisingly strong household consumption and rising government current expenditure. August saw a jump in new jobs which, together with solid consumer confidence throughout the quarter, points to healthy private consumption in Q3. Moreover, positive business conditions suggest business investment could have bounced back in the third quarter after a dim Q2. That said, the recent increase in mortgage rates could weigh on construction activity.

Australia Economic Growth

Growth should moderate next year but nonetheless remain robust. Sustained global demand for coal, iron ore and liquified natural gas will boost exports, while still accommodative monetary conditions and a supportive business environment will underpin investment. That said, the main downside risks stem from a possible rise in protectionism and uncertainty surrounding the outcome of next year’s elections. FocusEconomics panelists expect GDP to expand 3.0% in 2018 and 2.8% in 2019, up 0.1 percentage points from last month’s forecast.

Australia Economy Data

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 %)
Consumption (annual variation in %)-  -  -  -  -  
Investment (annual variation in %)-1.7-2.0-3.6-2.13.1
Exports (G&S, annual variation in %)
Imports (G&S, annual variation in %)-2.0-
Industrial Production (annual variation in %)
Retail Sales (annual variation in %)
Unemployment Rate5.
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)
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)
Policy Interest Rate (%)2.502.502.001.501.50
Stock Market (annual variation in %)14.80.7-
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-

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Australia Facts

Bond Yield2.731.47 %Oct 11
Exchange Rate0.710.05 %Oct 12
Stock Market6,0070.08 %Oct 12

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