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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