ECONOMIC FORECASTING – AUSTRALIA

Housing slide threatens surplus hopes

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Original article by Michael Roddan
The Australian – Page: 2 : 28-Feb-19

Data from the Australian Bureau of Statistics shows that construction activity fell by a higher-than-expected 3.1 per cent nationwide in the December quarter, with housing construction falling by 3.6 per cent. The decline in construction work is likely to weigh on GDP growth for the quarter, which may in turn affect economic forecasts in the federal government’s April 2019 Budget. Growth forecasts had already been scaled back in the mid-year Budget update.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, AUSTRALIA. DEPT OF THE TREASURY, UBS HOLDINGS PTY LTD, RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH SECURITIES LIMITED, JP MORGAN AUSTRALIA LIMITED

Incomes to be weak for years: IMF

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Original article by John Kehoe
The Australian Financial Review – Page: 1 & 4 : 26-Feb-19

The International Monetary Fund expects the Australian economy to grow by just 2.6 per cent in 2020, compared with the federal government’s forecast of three per cent growth. The IMF’s forecasts also show that growth in real incomes will average 0.3 per cent annually over the next six years, when adjusted for inflation. This compares with a long-term average of 1.8 per cent since the 1960s. Industry Super Australia’s chief economist Stephen Anthony says the IMF’s forecasts demonstrate the need for both sides of politics to put economic reform on their policy agenda.

CORPORATES
INTERNATIONAL MONETARY FUND, INDUSTRY SUPER AUSTRALIA PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, DELOITTE ACCESS ECONOMICS PTY LTD, OUTLOOK ECONOMICS, RESERVE BANK OF AUSTRALIA, AUSTRALIAN LABOR PARTY, LIBERAL PARTY OF AUSTRALIA, NATIONAL PARTY OF AUSTRALIA

Wage rises to arrest falling growth outlooks

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Original article by Natasha Gillezeau, Matthew Cranston
The Australian Financial Review – Page: 9 : 14-Feb-19

BIS Oxford Economics recently downgraded its GDP growth forecast to 2.2 per cent, but the firm does not expect the Hayne royal commission to have much impact on the economy. Alexandra Heath, the Reserve Bank’s head of economics, says the labour market was more resilient in 2018 than the central bank had expected, and it is likely to remain strong in 2019. She says this should in turn lead to a gradual increase in wages. She adds that the downturn in the housing market is unlikely to have much impact on economic growth or consumer spending.

CORPORATES
BIS OXFORD ECONOMICS PTY LTD, RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, UNIVERSITY OF MELBOURNE. INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH

Next rates move still up, RBA insists

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Original article by David Rogers, James Glynn
The Australian – Page: 19 & 28 : 6-Feb-19

The Reserve Bank of Australia has downgraded its forecast for economic growth in 2019 from 3.25 per cent to around three per cent, after leaving the cash rate unchanged at 1.5 per cent. The central bank has also advised that it now expects the unemployment rate to fall to around 4.75 per cent over the next several years, while it forecasts an underlying inflation rate of two per cent in 2019. Analysts expect official interest rates to remain on hold for some time.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, UNITED STATES. FEDERAL RESERVE BOARD, EUROPEAN CENTRAL BANK, AUSTRALIAN BUREAU OF STATISTICS

Rates rise tipped but not soon

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Original article by James Glynn
The Australian – Page: 27 : 31-Jan-19

There is general consensus in financial markets that the Reserve Bank of Australia will keep official interest rates on hold at 1.5 per cent in February. However forme RBA board member John Edwards says the next movement in the cash rate will be up rather than down, although this is will not happen in the near-term. He adds that the RBA’s economic growth and inflation forecasts for 2019 are "quite plausible".

CORPORATES
RESERVE BANK OF AUSTRALIA

RBA will ignore gloom and stay a growth hawk

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Original article by James Glynn
The Australian – Page: 23 : 25-Jan-19

The Reserve Bank of Australia is tipped to scale back its economic growth forecasts for 2019 and 2020, after GDP growth was just 2.8 per cent year-on-year in the December 2018 quarter. The RBA had previously forecast growth of 3.5 per cent for 2018. However, the central bank is expected to maintain its hawkish stance, given that the unemployment rate eased in December. The strong labour market also means an increase in the cash rate is more likely than a cut.

CORPORATES
RESERVE BANK OF AUSTRALIA

No wonder business is nervous, says Shepherd

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Original article by Joe Kelly
The Australian – Page: 2 : 22-Jan-19

Former Business Council of Australia president Tony Shepherd says the nation’s economy is solely dependent on resources exports, which in turn are dependent on global economic growth. Shepherd has also warned that Australian policymakers have become complacent after 27 years of economic growth. Meanwhile, federal Treasurer Josh Frydenberg says unions would be the biggest risk to the economy under Labor’s industrial relations policy.

CORPORATES
BUSINESS COUNCIL OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, THE AUSTRALIAN INDUSTRY GROUP

Slowdown threatens budget surplus

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Original article by John Kehoe
The Australian Financial Review – Page: 3 : 10-Jan-19

Fitch Solutions has cast doubt upon the federal government’s timetable for a return to a Budget surplus. The government expects a surplus equivalent to 0.2 per cent of GDP in 2019-20, but Fitch has forecast that factors such as slowing economic growth will result in a deficit equivalent to 0.1 per cent of GDP for the financial year. The firm warns that increased government spending and slowing global economic growth will also delay the return to a surplus. Fitch’s forecast of a 2018-19 deficit equivalent to 0.3 per cent of GDP is in line with the government’s projections.

CORPORATES
FITCH SOLUTIONS, FITCH RATINGS LIMITED, AUSTRALIA. DEPT OF THE TREASURY, UBS HOLDINGS PTY LTD, DELOITTE ACCESS ECONOMICS PTY LTD, RESERVE BANK OF AUSTRALIA

Paris treaty to shrink economy

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Original article by Adam Creighton, Ben Packham
The Australian – Page: 1 & 2 : 9-Jan-19

Analysis by the Brookings Institut­ion suggests that the Paris climate change agreement will have a negative impact on the Australian economy and jobs growth, even if the nation were to opt out of the agreement. The report notes that Australia’s fossil exports would still be subject to the Paris agreement’s carbon tax under such a scenario. It also questions whether the Paris agreement would achieve its goals in terms of reducing carbon emissions and limiting global temperature increases.

CORPORATES
THE BROOKINGS INSTITUTION, AUSTRALIAN LABOR PARTY, LIBERAL PARTY OF AUSTRALIA, AUSTRALIA. DEPT OF THE ENVIRONMENT AND ENERGY, AUSTRALIAN NATIONAL UNIVERSITY, ORGANISATION OF PETROLEUM EXPORTING COUNTRIES, MINERALS COUNCIL OF AUSTRALIA, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

RBA to cut its 3.25pc growth forecast, economists say

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Original article by Tim Boyd
The Australian Financial Review – Page: 6 : 20-Dec-18

Janu Chan of St George Bank is among the economists who expect the Reserve Bank of Australia to scale back its economic growth forecast of 3.25 per cent for 2018-19 at its first board meeting in 2019. This follows lower-than-expected GDP growth for the September quarter. The central bank’s monetary policy meeting in February will take into account the latest inflation and employment data.

CORPORATES
RESERVE BANK OF AUSTRALIA, ST GEORGE BANK LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ