Australia Economic Forecast

Australia Economic Outlook

November 17, 2020

The economic recovery was seemingly limited in Q3, following Q2’s record GDP contraction. On the production side, business confidence—despite improving from Q2—remained entrenched in pessimistic territory. This, coupled with a sizable contraction in merchandise exports, points to still-weak private sector activity. Meanwhile, elevated uncertainty and the lockdown in Victoria seemed to weigh on consumer confidence and constrain spending in Q3: Retail sales contracted month-on-month in both August and September. Moreover, the labor market shed jobs at the tail end of the quarter, likely further dragging on private consumption. Moving to Q4, the lifting of lockdown measures in Melbourne in late October bodes well for the recovery. Furthermore, the adoption of an expansionary budget for FY 2021 boosted consumer and business confidence at the beginning of the quarter and should support activity ahead.

Australia Economic Growth

The economy is projected to return to growth in 2021, following this year’s pronounced contraction. A recovery in household spending and fixed investment, supportive fiscal and monetary policy measures, and the gradual reopening of the global economy should fuel the rebound. However, potential further restrictions at home and abroad pose a downside risk. FocusEconomics panelists project GDP to expand 3.2% in 2021, which is unchanged from last month’s estimate. In 2022, the economy is seen expanding 3.3%.

Australia Economy Data

2015 2016 2017 2018 2019
Population (million)24.024.424.825.225.6
GDP per capita (USD)51,47451,97055,96156,48854,222
GDP (USD bn)1,2351,2681,3861,4221,386
Economic Growth (GDP, annual variation in %)2.32.82.52.81.8
Consumption (annual variation in %)-  -  -  -  -  
Investment (annual variation in %)-4.0-2.43.52.5-2.2
Exports (G&S, annual variation in %)6.56.93.45.13.2
Imports (G&S, annual variation in %)2.00.17.84.1-1.2
Industrial Production (annual variation in %)1.72.01.23.82.4
Retail Sales (annual variation in %)4.53.72.43.02.7
Unemployment Rate6.15.75.65.35.2
Fiscal Balance (% of GDP)-2.3-2.4-1.9-0.50.0
Public Debt (% of GDP)37.740.541.141.545.0
Money (annual variation in %)13.78.28.92.322.1
Inflation Rate (CPI, annual variation in %, eop)1.71.51.91.81.8
Inflation Rate (CPI, annual variation in %)1.51.31.91.91.6
Inflation (PPI, annual variation in %)1.40.91.61.81.8
Policy Interest Rate (%)2.001.501.501.500.75
Stock Market (annual variation in %)-0.87.07.8-7.419.1
Exchange Rate (vs USD)0.730.720.780.710.70
Exchange Rate (vs USD, aop)0.750.740.770.750.70
Current Account (% of GDP)-4.7-3.3-2.6-2.00.6
Current Account Balance (USD bn)-58.2-41.4-35.4-28.57.8
Trade Balance (USD billion)-13.13.110.030.357.2

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Australia Facts

Value Change Date
Bond Yield1.371.47 %Dec 31
Exchange Rate0.700.05 %Dec 31

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Australia Economic News

  • Australia: Business confidence jumps in January

    February 21, 2021

    The business confidence index produced by National Australia Bank (NAB) jumped to 10.0 points in January from 4.7 points in December.

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  • Australia: Consumer sentiment improves in February

    February 21, 2021

    The Westpac-Melbourne Institute consumer sentiment index rose to 109.1 in February from 107.0 in January.

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  • Australia: Retail sales rebound in January

    February 19, 2021

    Nominal retail sales in January increased 0.6% over the previous month in seasonally-adjusted terms, swinging from December’s 4.1% slump, according to preliminary figures. A healthy increases in food retailing led the rises, while declines were recorded in clothing, footwear and personal accessory retailing, household goods retailing, and department stores—which were negatively affected by a three day lockdown in Brisbane.

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  • Australia: Unemployment rate at 10-month low in January

    February 18, 2021

    Seasonally-adjusted employment increased by 29,100 in January, following 50,000 jobs gain in December.

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  • Australia: Retail sales slump in December

    February 5, 2021

    Nominal retail sales in December plunged 4.1% over the previous month in seasonally-adjusted terms, swinging from November’s 7.1% surge. Particularly pronounced decreases were recorded in household goods retailing, clothing, footwear and personal accessory retailing, department stores and other retailing, while cafes, restaurants and takeaway food services saw a healthy increase. In annual terms, retail sales grew 10.3% in December, following November’s 12.1% surge.

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