ECONOMIC FORECASTING – AUSTRALIA

RBA eyes housing rebound as economic growth slows

roymorgansocial Leave a comment

Original article by Adam Creighton
The Australian – Page: 1 & 2 : 4-Sep-19

The latest national accounts data is expected to show that Australia’s GDP growth slowed to about 1.5 per cent in the year to June, well below the federal government’s May 2019 Budget forecast of 2.25 per cent growth. Reserve Bank governor Philip Lowe has reiterated that economic growth will improve "gradually"; he notes that although new housing construction activity remains weak, there are signs of an upturn in the established housing market. The central bank’s decision to leave official interest rates on hold in September coincided with the release of data confirming a current account surplus of $5.9bn for the June quarter, the first since the 1970s.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN BUREAU OF STATISTICS, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, CAPITAL ECONOMICS LIMITED, AUSTRALIAN GREENS

Look through soft growth

roymorgansocial Leave a comment

Original article by Phillip Coorey, Matthew Cranston
The Australian Financial Review – Page: 1 & 4 : 3-Sep-19

There is speculation that the latest national accounts data will show that Australia’s growth slowed to about 1.4 per cent in the year to June. Treasurer Josh Frydenberg says GDP data for the June quarter is likely to be particularly weak, given that it was dominated by the federal election and the US-China trade war. He expects economic conditions to improve in the September quarter, citing stimulatory factors such as the Coalition’s income tax cuts and back-to-back interest rate cuts in June and July. Frydenberg stresses that the Australian economy’s fundamentals remain strong.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, RESERVE BANK OF AUSTRALIA, AUSTRALIAN LABOR PARTY, CORELOGIC AUSTRALIA PTY LTD

Investment outlook clouded by global risks

roymorgansocial Leave a comment

Original article by David Rogers
The Australian – Page: 25 : 30-Aug-19

Marcel Thieliant of Capital Economics expects the upcoming national accounts data to show that the Australian economy grew by just 0.2 per cent in the June quarter. This follows the release of data showing an 0.5 per cent decline in private new capital expenditure during the quarter; financial markets had anticipated an increase of 0.4 per cent. However, there has been a 16.7 per rise in capital expenditure intentions for 2019-20, with capex estimates in the mining sector revised upwards by 17.7 per cent.

CORPORATES
CAPITAL ECONOMICS LIMITED, UBS HOLDINGS PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC, AMP CAPITAL INVESTORS LIMITED, AUSTRALIA. DEPT OF THE TREASURY, BUSINESS COUNCIL OF AUSTRALIA, RESERVE BANK OF AUSTRALIA

Hard economic landing would deliver a body blow

roymorgansocial Leave a comment

Original article by Geoff Chambers
The Australian – Page: 4 : 29-Aug-19

PwC’s chief economist Jeremy Thorpe has warned of the potential impact on Australia if the Chinese economy experiences a hard landing. He says the resulting downturn in Australia’s exports to China would reduce government revenue from corporate taxes and mining royalties, while Budget surplus forecasts would need to revised. Thorpe adds that there could also be mine closures and job losses in the resources sector if lower Chinese demand puts downward pressure on commodity prices.

CORPORATES
PRICEWATERHOUSECOOPERS AUSTRALIA (INTERNATIONAL) PTY LTD, DELOITTE TOUCHE TOHMATSU LIMITED

Chinese trade pullback could cost $25bn

roymorgansocial Leave a comment

Original article by David Rogers
The Australian – Page: 17 & 27 : 22-Aug-19

Andrew Boak of Goldman Sachs warns that the fallout from the US-China trade war could eventually hit Australia. He says growing tensions between Australia and China could potentially result in a sharp fall in Chinese demand for key Australian exports, including education and commodities such as iron ore and coal. Goldman Sachs suggests that in a worst-case scenario, lower Chinese demand could reduce Australia’s GDP growth rate by 130 basis points in 2020.

CORPORATES
GOLDMAN SACHS AUSTRALIA PTY LTD, HUAWEI TECHNOLOGIES COMPANY LIMITED, BHP GROUP LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG

Top bureaucrat’s warning on threat to living standards

roymorgansocial Leave a comment

Original article by Simon Benson
The Australian – Page: 1 & 4 : 25-Jul-19

The Department of Prime Minister & Cabinet’s outgoing secretary Martin Parkinson says Australia’s productivity growth has fallen below global standards. He warns that growth in Australia’s living standards will decline over the next decade unless action is taken to boost productivity. Parkinson adds that political instability and policy uncertainty may have contributed to the fall in productivity over the last decade.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA

RBA to look past weak GDP in June quarter

roymorgansocial Leave a comment

Original article by John Kehoe
The Australian Financial Review – Page: 7 : 23-Jul-19

Economists expect that annualised GDP growth will be less than that recorded in the March quarter when figures for the June quarter are released. IFM Investors’ chief economist Alex Joiner says the expected weak result could explain why the Reserve Bank of Australia decided to cut interest rates in June and July. The RBA and the federal government are expected to look at other economic data in preference to the June GDP figures when deciding whether further monetary or fiscal stimulus is needed.

CORPORATES
IFM INVESTORS PTY LTD, RESERVE BANK OF AUSTRALIA

Lower taxes can lift growth and wages

roymorgansocial Leave a comment

Original article by Michael Roddan
The Australian – Page: 2 : 17-Jul-19

The University of Melbourne’s John Freebairn argues that reducing the tax rate for larger companies would stimulate economic growth and help to increase wages. He adds that a tax cut for large companies with non-resident shareholders in particular would boost GDP growth. The federal government has ruled out further attempts to introduce tax cuts for businesses with annual turnover of more than $50m following the bill’s rejection by the Senate.

CORPORATES
UNIVERSITY OF MELBOURNE, AUSTRALIA. DEPT OF THE TREASURY, ECONOMICS SOCIETY OF AUSTRALIA

RBA, tax cuts are more than enough boost

roymorgansocial Leave a comment

Original article by Matthew Cranston
The Australian Financial Review – Page: 4 : 8-Jul-19

Stephen Koukoulas of Market Economics and Andrew Charlton from Alphabeta say that further fiscal stimulus is not needed at present to boost the Australian economy. They argue that the federal government’s income tax cuts, the Reserve Bank’s latest official interest rate reduction and an easing of credit restrictions should be sufficient, and in fact may provide a greater economic boost than many observers anticipate. They add that too much fiscal stimulus could put a return to a Budget surplus at risk.

CORPORATES
MARKET ECONOMICS PTY LTD, ALPHABETA, RESERVE BANK OF AUSTRALIA

Warning of reform or forgo $1.5 trillion windfall

roymorgansocial Leave a comment

Original article by Sid Maher
The Australian – Page: 1 & 2 : 18-Jun-19

The 2019 Australian National Outlook report highlights the economic benefits from pursuing economic, social and environmental reform over coming decades, and the likely cost of failing to undertake reform. The two-year study concludes that a wide-ranging reform agenda could see the Australian economy grow to between $5.5trn and $5.6trn by 2060; conversely, the economy would grow to just $4.1trn without such reform. The report also warns that in a worst-case scenario, the digital divide could see the unemployment rate could peak at 20 per cent by 2040 and then average 10 per cent in future years.

CORPORATES
CSIRO, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB