Australia Economic Forecast

Australia Economic Outlook

February 25, 2020

The economy apparently recovered some steam in the fourth quarter of 2019, after weak wage gains and falling fixed investment suppressed growth in the third quarter. Better business conditions and lower interest rates suggest private sector activity improved in Q4; however, lackluster retail sales and downbeat consumer confidence spell trouble for household spending, while cooling export growth points to a weakening external sector. Turning to the first quarter of this year, protracted pessimism among consumers in January-February, weaker business conditions and an uptick in the unemployment rate in the first month of the quarter as well as spillovers from the coronavirus hint at a weak economic showing. That said, rising property prices in January reflect a continued revival in the housing market which should bode well for activity going forward.

Australia Economic Growth

This year, growth should gain some traction, thanks to stronger domestic demand. A pick-up in wage growth, coupled with a tight labor market and modest inflation, is expected to support household spending, while investment should benefit from lower interest rates and a rebound in the housing market. However, the coronavirus and reigniting trade tensions cloud the outlook. FocusEconomics panelists project GDP to expand 2.1% in 2020, which is down 0.1 percentage points from last month’s forecast. In 2021, growth is seen strengthening to 2.5%.

Australia Economy Data

2014 2015 2016 2017 2018
Population (million)23.624.024.424.825.2
GDP per capita (USD)61,61851,47451,97155,97056,462
GDP (USD bn)1,4571,2351,2681,3871,421
Economic Growth (GDP, annual variation in %)2.62.32.82.52.7
Consumption (annual variation in %)-  -  -  -  -  
Investment (annual variation in %)-1.9-4.0-2.33.52.4
Exports (G&S, annual variation in %)6.96.56.93.45.1
Imports (G&S, annual variation in %)-1.42.00.17.84.1
Industrial Production (annual variation in %)4.51.72.01.23.8
Retail Sales (annual variation in %)5.54.53.72.43.0
Unemployment Rate6.16.15.75.65.3
Fiscal Balance (% of GDP)-3.0-2.3-2.4-1.9-0.5
Public Debt (% of GDP)34.137.740.541.141.4
Money (annual variation in %)6.313.78.28.92.3
Inflation Rate (CPI, annual variation in %, eop)1.71.71.51.91.8
Inflation Rate (CPI, annual variation in %)2.51.51.31.91.9
Inflation (PPI, annual variation in %)1.71.40.91.61.8
Policy Interest Rate (%)2.502.001.501.501.50
Stock Market (annual variation in %)0.7-0.87.07.8-7.4
Exchange Rate (vs USD)0.820.730.720.780.71
Exchange Rate (vs USD, aop)0.900.750.740.770.75
Current Account (% of GDP)-3.2-4.7-3.3-2.6-2.0
Current Account Balance (USD bn)-46.8-58.3-41.5-35.5-28.8
Trade Balance (USD billion)11.9-13.13.110.030.3

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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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