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Australia Economic Forecast

Australia Economic Outlook

The economy expanded at a steady quarter-on-quarter pace in Q2, but available data suggests it likely lost some momentum in Q3 amid higher interest rates. The unemployment rate averaged slightly higher in the third quarter than in Q2, while consumer sentiment weakened. On top of this, M2 money supply rose at a softer pace year on year—a further sign of weakening momentum. On the flipside, business confidence strengthened, while month-on-month retail sales swung into growth. Momentum is expected to remain broadly stable in Q4, with diverging data showing rising consumer confidence but worsening conditions in the manufacturing sector. Meanwhile, in late October, the government announced that it had temporarily abandoned talks regarding a free trade agreement with the EU due to a lack of progress in negotiations.

Australia Inflation

Annual inflation came in at 5.4% in Q3, down from Q2’s 6.0% and moving closer to the Reserve Bank’s 2.0–3.0% target band. Inflation is expected to ease from current levels in 2024 amid a more favorable base effect and as the effects of monetary tightening are fully transmitted to the economy.

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) 25.1 25.5 25.6 25.8 26.3
GDP (USD bn) 1,415 1,386 1,358 1,644 1,699
GDP per capita (USD) 56,287 54,301 52,996 63,781 64,693
GDP (AUD bn) 1,896 1,994 1,973 2,190 2,451
GDP per capita (AUD) 75,381 78,126 76,973 84,963 93,310
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 6.7 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 57.2 55.9 50.7
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 47.6 96.0 122.6
Foreign Direct Investment (USD bn) 67.6 38.9 13.6 20.9 61.6

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