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Australia Economic Forecast

Australia Economic Outlook

GDP expanded at a stable quarter-on-quarter pace of 0.4% in the second quarter, coming in above market expectations. Growth in exports of goods and services gained considerable steam in the period, boosted by rising international demand for mineral commodities, increased educational travel and a recovering tourism sector. The external sector’s strong performance counterbalanced cooling household spending and strong destocking. Moving to the current quarter, the economy has likely lost some momentum, constrained by previous interest rate hikes and still-high inflation. Employment fell, and the unemployment rate ticked up in July, while consumer sentiment averaged lower in Q3 than in the previous quarter. That said, business confidence picked up in July and August, while business conditions strengthened to a four-month high reading in August.

Australia Inflation

Annual inflation came in at 6.0% in Q2, down from Q1’s 7.0% and marking the lowest reading since the third quarter of 2022. Therefore, inflation moved closer to the Reserve Bank’s 2.0–3.0% target band. Inflation is set to ease from current levels in H2 amid a more favorable base effect, but electricity tariff hikes in July and upward pressure on rents will limit the fall.

This chart displays Economic Growth (GDP, annual variation in %) for Australia from 2013 to 2022.

Australia Economic Data

2018 2019 2020 2021 2022
Population (million) 25.2 25.5 25.6 25.8 26.0
GDP (USD bn) 1,415 1,386 1,358 1,644 1,699
GDP per capita (USD) 56,276 54,286 52,979 63,793 65,428
GDP (AUD bn) 1,896 1,994 1,973 2,190 2,451
GDP per capita (AUD) 75,366 78,105 76,949 84,980 94,370
Economic Growth (Nominal GDP, ann. var. %) 5.2 5.2 -1.0 11.0 11.9
Economic Growth (GDP, ann. var. %) 2.8 1.9 -1.8 5.2 3.7
Private Consumption (ann. var. %) 2.4 1.1 -5.8 5.0 6.5
Government Consumption (ann. var. %) 4.1 6.2 7.7 5.4 5.2
Business Investment (ann. var. %) 2.6 -0.8 -3.8 8.9 3.9
Dwelling Investment (ann. var. %) 4.3 -7.2 -5.6 9.9 -3.5
Fixed Investment (ann. var. %) 2.3 -2.5 -2.8 10.5 1.2
Exports (G&S, ann. var. %) 5.1 3.2 -9.7 -2.0 3.4
Imports (G&S, ann. var. %) 4.3 -1.1 -12.8 5.4 12.9
Industrial Production (ann. var. %) 4.0 2.2 -0.8 0.8 0.5
Retail Sales (ann. var. %) 3.0 2.7 6.6 5.3 11.3
Wages (ann. var. %) 2.2 2.3 1.7 2.0 2.9
Unemployment (% of active population, eop) 5.0 5.1 6.6 4.2 3.5
Unemployment (% of active population, aop) 5.3 5.2 6.5 5.1 3.7
Fiscal Balance (% of GDP) -0.6 0.0 -4.3 -6.4 -1.4
Public Debt (% of GDP) 41.8 46.7 57.1 57.6 55.7
Inflation (CPI, ann. var. %, eop) 1.8 1.8 0.9 3.5 7.8
Inflation (CPI, ann. var. %, aop) 1.9 1.6 0.8 2.9 6.6
Inflation (PPI, ann. var. %, aop) 1.8 1.8 0.1 2.2 5.7
RBA Cash Rate (%, eop) 1.50 0.75 0.10 0.10 3.10
90-Day Bank Bill (%, eop) 2.02 0.90 0.02 0.06 3.17
10-Year Bond Yield (%, eop) 2.32 1.37 0.97 1.67 4.05
Stock Market (ann. var. of ASX %) -7.4 19.1 0.7 13.6 -7.2
Exchange Rate (USD per AUD, eop) 0.70 0.70 0.77 0.73 0.68
Exchange Rate (USD per AUD, aop) 0.75 0.70 0.69 0.75 0.69
Current Account Balance (USD bn) -31.0 5.2 30.2 48.8 18.3
Current Account Balance (% of GDP) -2.2 0.4 2.2 3.0 1.1
Merchandise Trade Balance (USD bn) 30.3 57.3 48.1 97.2 123.6
Foreign Direct Investment (USD bn) 67.6 38.9 13.6 20.9 61.6

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