ECONOMIC FORECASTING – AUSTRALIA

Rates to stay low ‘for decades’: RBA

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Original article by Cliona O’Dowd
The Australian – Page: 19 & 29 : 14-Feb-20

Reserve Bank governor Philip Lowe has conceded that the coronavirus outbreak is likely to have a near-term impact on the economy, although he does not expect the outlook for 2020 to be significantly affected. He adds that the Australian economy will benefit from stimulus measures in China when the virus is brought under control. Lowe has also warned that climate change has ‘profound’ economic implications for Australia, while he says official interest rates may remain low for a long time.

CORPORATES
RESERVE BANK OF AUSTRALIA

Travel bans set to knock $6bn from economy

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Original article by Richard Ferguson
The Australian – Page: 7 : 13-Feb-20

Investment bank UBS expects Australia to record negative GDP growth in the March quarter, due to the introduction of travel bans in response to the coronavirus. UBS economist George Tharenou warns that annual growth could fall by about 0.9 per cent, which equates to a $6bn economic hit. The federal government’s national security committee will shortly decide whether to extend the ban on people travelling to Australia from mainland China; the ban has affected sectors such as education, tourism and retailing.

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UBS HOLDINGS PTY LTD

RBA optimism boosts dollar

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Original article by David Rogers
The Australian – Page: 17 & 27 : 6-Feb-20

The odds of an official interest rate cut in the near-term have lengthened, with financial market pricing now implying that rates will be on hold until September. Meanwhile, the Australian dollar rebounded from its recent four-month low in response to a speech by Reserve Bank governor Philip Lowe on 5 February. He said the bushfires will have little impact on Australia’s overall economic growth in 2020, due to expenditure on recovery programs. However, he conceded that GDP growth will fall in the short-term. Lowe added that it is too soon to determine the likely economic impact of the coronavirus.

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RESERVE BANK OF AUSTRALIA

RBA keeps faith in the economy

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Original article by David Rogers
The Australian – Page: 17 & 24 : 5-Feb-20

Financial markets still expect the Reserve Bank of Australia to reduce the cash rate by June, after it left rates unchanged at 0.75 per cent on 4 February. The general consensus of economists is that the cash rate will remain on hold in March. Meanwhile, economists had expected the RBA to downgrade its economic growth forecasts for 2020 and 2021 in the wake of the bushfires and the coronavirus crisis, but these have been left at 2.75 per cent and 3 per cent respectively. The central bank also expects the unemployment rate to remain at around 5.1 per cent in 2020, before easing to less than five per cent in 2021.

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RESERVE BANK OF AUSTRALIA

Virus crisis could cost nation $13bn

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Original article by Geoff Chambers
The Australian – Page: 1 & 6 : 3-Feb-20

Treasurer Josh Frydenberg has conceded that events that are beyond the federal government’s control will have a significant impact on the domestic economy. Some estimates suggest that the coronavirus could potentially reduce economic activity by up to $13bn in the first half of 2020, with the tourism and education export sectors to be particularly hard hit. The coronavirus could also jeopardise the government’s revenue projections in its mid-year Budget update, due to its potential effect on the prices of commodities such as iron ore and coal.

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AUSTRALIA. DEPT OF THE TREASURY, MINERALS COUNCIL OF AUSTRALIA, BHP GROUP LIMITED – ASX BHP

2020 survey: no lift in wage growth, no lift in economic growth and no progress on unemployment in year of low expectations

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Original article by Peter Martin
The Conversation – Page: Online : 29-Jan-20

A panel of 24 leading economists expects Australia’s economic growth to remain at or below two per cent in 2020. The average forecast is for growth of 1.9 per cent. The consensus of the economists is that the unemployment rate will remain above five per cent, while growth in wages will remain at around 2.2 per cent. The panel also expects the iron ore price to continue to fall, which will in turn see growth in Australians’ living standards slow to 2.4%. Meanwhile, there is general agreement among the economists that official interest rates will be cut just once in 2020 and the the Reserve Bank will not have to pursue quantitative easing.

CORPORATES
RESERVE BANK OF AUSTRALIA

China trade links mean virus a $1bn risk

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Original article by Adam Creighton
The Australian – Page: 4 : 29-Jan-20

Australian National University economist Warwick McKibbin estimated in 2003 that the SARS virus reduced the nation’s GDP growth by 0.07 per cent. He says the coronavirus could have a much bigger impact on the Australian economy, noting that the Chinese economy is now much larger and more integrated than in 2003, while Australia has become much more dependent on trade with China. Business and consumer confidence is also likely to be negatively affected by the new virus, having already taken a hit from the bushfires crisis.

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AUSTRALIAN NATIONAL UNIVERSITY

Bushfires stoke recession fears as World Bank sounds alarm over debt

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Original article by Euan Black
The New Daily – Page: Online : 10-Jan-20

Shane Oliver of AMP Capital warns that the bushfires could reduce GDP growth by 0.4 per cent in the March quarter. He says this will be primarily due to the impact of the fires on agriculture, tourism, consumer confidence and consumer spending. Martin North of Digital Finance Analytics adds that the bushfires could reduce national economic output by up to $36bn over coming years. He has also warned of the potential for a macroeconomic recession in the near-term. The bushfires have already had an impact on consumer sentiment, with the ANZ-Roy Morgan Australian Consumer Confidence Index falling by 1.7 per cent.

CORPORATES
AMP CAPITAL INVESTORS LIMITED, DIGITAL FINANCE ANALYTICS, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, ROY MORGAN LIMITED, WORLD BANK

Economic cost of bushfires estimated at $2 billion and rising

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Original article by Jessica Irvine
The Age – Page: Online : 7-Jan-20

Terry Rawnsley of SGS Economics & Planning estimates that the bushfires will reduce national gross domestic product by about 0.15 per cent in 2019-20. He adds that the economic cost to bushfire-affected regions will be within the range of $1.1bn to $1.9bn. Meanwhile, Shane Oliver of AMP Capital says the bushfire crisis is likely to reduce national economic output by between 0.25 per cent and 1 per cent, while economist Saul Eslake still expects the federal government to deliver a Budget surplus for 2019-20.

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SGS ECONOMICS AND PLANNING PTY LTD, AMP CAPITAL INVESTORS LIMITED

Yuletide bounce falls flat for shops

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Original article by Patrick Commins
The Australian – Page: 3 : 24-Dec-19

AMP Capital’s Shane Oliver says the bushfire crisis is likely to affect consumer sentiment during the retail sector’s crucial Christmas trading period. He notes that consumer confidence had already been dampened by factors such as low wages growth, a high underemployment rate and economic uncertainty. The Australian Retailers Association has forecast that consumer spending will by rise 2.6 per cent to $52.7bn between 14 November and 24 December, while it expects spending at post-Christmas sales to rise 2.4 per cent to $18.7bn.

CORPORATES
AMP CAPITAL INVESTORS LIMITED, AUSTRALIAN RETAILERS ASSOCIATION, DELOITTE ACCESS ECONOMICS PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ