Australia Economic Forecast

Australia Economic Outlook

August 25, 2020

Economic activity is likely downbeat so far in Q3: The unemployment rate ticked up to an over two-decade high in July, while business confidence nosedived in the same month and consumer confidence deteriorated in July–August. This comes amid the renewed lockdowns of the city of Melbourne and the broader region of Victoria, which will be hampering demand in these areas. More positively, the manufacturing PMI rose to a four-month high in July. This follows a second quarter in which the economy already received a blow from Covid-19. The unemployment rate jumped in the quarter while retail sales softened, indicating weaker household spending. Meanwhile, markedly deteriorating manufacturing operating conditions and deeply pessimistic business confidence will have weighed on fixed investment. On the external front, merchandise exports crashed amid foreign lockdowns weighing on demand.

Australia Economic Growth

GDP is forecast to contract notably this year. The pandemic and associated containment measures will deal a severe blow to domestic and foreign demand, with household spending, business investment and exports all affected. While a prolonged second wave of infections poses a downside risk, fiscal and monetary stimulus should cushion the fall somewhat. FocusEconomics panelists project GDP to contract 3.8% in 2020, which is down 0.3 percentage points from last month’s forecast. In 2021, the economy is seen expanding 3.1%.

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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