Australia Economic Forecast

Australia Economic Outlook

April 16, 2019

Following a weak H2 2018, available data suggests growth picked up in Q1 2019. Continued job gains, tightening labor market conditions and an unexpected surge in retail sales in February over the previous month point to surprising resilience in household spending, although consumer sentiment weakened in Q1 on sluggish wage growth and high debts. Moreover, the external sector continued to fire on all cylinders: February saw the second-largest trade surplus on record, thanks to buoyant commodity exports. In addition, building approvals rebounded in January and surged in February, suggesting house prices may have bottomed out. In politics, Australians prepare to head to the polls in May to elect a new parliament. The opposition Labor Party is currently leading the polls by a narrow margin; tax cuts included in the recently unveiled 2019 Federal Budget could persuade voters to change their minds, however.

Australia Economic Growth

GDP growth will decelerate this year as declining residential construction limits fixed investment, while soft wage hikes and a hefty debt stock restrain private consumption. However, sturdy LNG exports will spur growth, while a strong labor market coupled with a possible turnaround in the housing market pose upside risks. Potential weakness in China’s economy is the key risk to the outlook. FocusEconomics panelists expect GDP to expand 2.3% in 2019, down 0.1 percentage points from last month’s forecast, and 2.6% in 2020.

Australia Economy Data

20132014201520162017
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 %)2.22.62.52.62.2
Consumption (annual variation in %)-  -  -  -  -  
Investment (annual variation in %)-1.7-2.0-3.6-2.13.1
Exports (G&S, annual variation in %)5.86.96.56.83.5
Imports (G&S, annual variation in %)-2.0-1.41.90.27.8
Industrial Production (annual variation in %)1.03.70.81.51.1
Retail Sales (annual variation in %)3.25.54.53.72.4
Unemployment Rate5.76.16.15.75.6
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)2.81.71.71.51.9
Inflation Rate (CPI, annual variation in %)2.42.51.51.31.9
Inflation (PPI, annual variation in %)1.61.71.40.91.6
Policy Interest Rate (%)2.502.502.001.501.50
Stock Market (annual variation in %)14.80.7-0.87.07.8
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)20.311.9-13.13.110.0

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Australia Facts

ValueChangeDate
Bond Yield1.951.47 %Apr 18
Stock Market6,3500.08 %Apr 18

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