ECONOMIC FORECASTING – AUSTRALIA

Surplus powered by iron ore and coal

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

Ernst & Young expects the federal Budget’s bottom line to be $9.2bn better off over the next two years than Treasury had forecast in the Mid-Year Economic and Fiscal Outlook. The firm’s modelling of the Budget outcome is based on factors such as the price of iron ore and coal. Iron ore has averaged $US72 per tonne so far in 2018-19, compared with the MYEFO forecast of $U55/tonne. The price of metallurgical coal is also trading well above the MYEFO forecast so far in the current financial year.

CORPORATES
ERNST AND YOUNG, AUSTRALIA. DEPT OF THE TREASURY, DELOITTE ACCESS ECONOMICS PTY LTD, AUSTRALIA. DEPT OF INDUSTRY, INNOVATION AND SCIENCE

GDP growth to make 30 years in a row: BIS

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Original article by Matthew Cranston
The Australian Financial Review – Page: 3 : 5-Mar-19

Gabriel Sterne of BIS Oxford Economics has forecast that the Australian economy will continue to expand for another two years. Sterne attributes the nation’s unprecedented period of economic growth to factors such as a low level of macro volatility, a flexible labour market and its ability to manage household debt levels. However, BIS Oxford Economics estimates that there is a 25 per cent change of a global recession in the next two years.

CORPORATES
BIS OXFORD ECONOMICS PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIA. PRODUCTIVITY COMMISSION, INTERNATIONAL MONETARY FUND, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Miners fuel drive towards surplus

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Original article by David Uren
The Australian – Page: 4 : 5-Mar-19

Westpac and the ANZ Bank expect the latest national accounts data to show that the Australian economy grew by 0.2 per cent in the December quarter, while National Australia Bank has forecast growth of 0.4 per cent. Meanwhile, data from the Australian Bureau of Statistics shows that pre-tax profits in the resources sector rose by $17.5bn in calendar 2018, which will in turn boost federal government revenue. However, earnings outside of the resources sector fell by 1.5 per cent during 2018.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIAN BUREAU OF STATISTICS, RESERVE BANK OF AUSTRALIA, AMP LIMITED – ASX AMP, AUSTRALIA. DEPT OF THE TREASURY

Spending boost to spur economy

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Original article by David Uren
The Australian – Page: 17 & 21 : 1-Mar-19

Non-mining investment is tipped to increase by 8.5 per cent in fiscal 2019, according to figures released by the Australian Bureau of Statistics. This is excess of the four per cent growth that Treasury had forecast in its mid-year budget review, while the Reserve Bank’s monthly credit report reveals that business lending is now at 5.2 per cent annual growth. The latest GDP figures are due to be released in the week beginning 4 March, with the Commonwealth Bank forecasting growth of between 0.25 per cent and 0.5 per cent.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, ADELAIDE BRIGHTON LIMITED – ASX ABC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

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