Australia Economic Forecast

Australia Economic Outlook

November 14, 2017

The economy remains in fairly good shape. The outlook for non-mining business investment has brightened, while strong public infrastructure spending is boosting growth. In addition, the unemployment rate dipped to a multi-year low in September. On the downside, retail sales were limp in Q3, a sure sign of continued meager wage growth, while household debt levels are high. At the end of October the High Court disqualified five members of parliament for holding dual citizenship, including deputy prime minister Barnaby Joyce. Several other MPs have also since resigned over the same issue. As a result, the government has lost its lower-house majority, and will have to rely on crossbenchers’ support to ensure political continuity. With several other MPs in the spotlight, the danger for the incumbent government is that more heads could roll in the coming months, worsening political instability and causing parliamentary gridlock going forward.

Australia Economic Growth

Economic growth is likely to pick up next year despite potential political instability, buoyed by loose monetary policy, a rebalancing towards non-mining sectors and a stronger external sector, with the latter thanks in part to greater LNG exports. However, slow wage growth and high household debt will continue to drag on growth. FocusEconomics panelists expect GDP to expand 2.7% in 2018, unchanged from last month’s forecast, and 2.6% in 2019.

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Australia Facts

Bond Yield2.511.47 %Dec 06
Exchange Rate0.760.05 %Dec 06
Stock Market6,0300.08 %Dec 06

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