ECONOMIC FORECASTING – AUSTRALIA

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

Slower wages growth pushes out RBA hike

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Original article by Matthew Cranston
The Australian Financial Review – Page: 4 : 18-Dec-18

The May 2018 Budget had forecast wages growth of 2.75 per cent in 2018-19, but this has been pared back to 2.5 per cent in the mid-year budget update. Wages are also expected to increase by three per cent in 2019-20, compared with previous expectations of 3.25 per cent growth. Meanwhile, growth in household consumption is also expected to be lower than projected in 2018-19, while the unemployment rate is tipped to fall further than forecast. The lower wages growth outlook may affect the timing of any change in monetary policy.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA, DELOITTE ACCESS ECONOMICS PTY LTD, KPMG AUSTRALIA PTY LTD

Threat to good times, says OECD

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Original article by John Kehoe
The Australian Financial Review – Page: 1 & 4 : 10-Dec-18

A new report from the OECD concludes that Australia’s housing market is likely to experience a soft landing. However, the OECD notes that the nation’s 27-year record of economic growth would be at risk if there is a hard landing in the property market. The international agency expects Australia to record economic growth of 3.1 per cent in 2018 and 2.9 per cent in 2019, although these forecasts were made prior to the release of the latest national accounts data.

CORPORATES
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. DEPT OF THE TREASURY

ALP’s tax hike would strangle economic growth

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Original article by Adam Creighton, Michael Roche
The Australian – Page: 1 & 2 : 14-Nov-18

Marcel Thieliant of Capital Economics expects Labor to win the next federal election, and he warns that the party’s proposed tax and regulatory reforms will result in slower economic growth over the next several years. The economist also expects growth in consumption to slow under a Labor government, while the Australian dollar could also fall sharply. Labor plans to increase taxes by $34bn over two years if it wins the election.

CORPORATES
CAPITAL ECONOMICS LIMITED, AUSTRALIAN LABOR PARTY, IFM INVESTORS PTY LTD

Budget moves closer to surplus on back of RBA upgrade

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Original article by John Kehoe
The Australian Financial Review – Page: 2 : 8-Nov-18

The federal government’s May 2018 Budget papers had forecast average real GDP growth of 2.75 per cent in 2018-19, rising to three per cent in 2019-20. The Budget could potentially return to surplus earlier than projected if the government upwardly revises its GDP forecasts in line with the latest forecasts issued by the Reserve Bank. The government will update its forecasts in December. Peter Downes of Outlook Economics says a surplus is possible in 2018-19, depending on the outlook for commodity prices, the Australian dollar and profits in the mining sector.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA, OUTLOOK ECONOMICS, DELOITTE ACCESS ECONOMICS PTY LTD, AUSTRALIA. DEPT OF FINANCE

RBA says it’s all systems go for booming economy

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Original article by David Uren
The Australian – Page: 1 & 2 : 7-Nov-18

The Reserve Bank of Australia is upbeat about the outlook for the domestic economy, forecasting growth of 3.5 per cent in 2018 and 2019. The central bank also expects the unemployment rate to fall to 4.75 per cent over the next two years, while inflation is forecast to rise above its target range in 2019 to an average of 2.25 per cent. Meanwhile, RBA governor Philip Lowe says growth in wages will be gradual. The RBA has again left interest rates on hold, and financial markets do not anticipate any change in monetary policy until 2020.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC

Australia most exposed to a downturn

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Original article by John Kehoe
The Australian Financial Review – Page: 3 : 31-Oct-18

Morgan Stanley has warned that Australia is at greater risk of an economic downturn than other Group of 10 nations due to rising household debt. The household debt-to-income ratio in Australia has risen to nearly 200 per cent amid the surge in house prices in recent years. Meanwhile, although house prices have fallen over the last 12 months, the Reserve Bank’s assistant governor Michele Bullock says a regulatory crackdown on lending to investors has not resulted in a significant downturn in the property market.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, RESERVE BANK OF AUSTRALIA, HSBC AUSTRALIA HOLDINGS PTY LTD, DELOITTE ACCESS ECONOMICS PTY LTD, AUSTRALIAN LABOR PARTY

ALP’s property-tax hit may be imposed as early as July

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Original article by Rosie Lewis
The Australian – Page: 1 & 6 : 25-Oct-18

Shadow treasurer Chris Bowen has defended Labor’s proposed negative gearing and capital gains tax reforms, amid concern about their impact on dwelling construction. He says modelling commissioned by Master Builders Australia is flawed as it does not take into account the fact that negative gearing changes will be "grandfathered". MBA CEO Denita Wawn argues that the grandfathering provisions will have no effect on future investment decisions. Sources have indicated that a Labor government would implement the negative gearing reforms from July 2020, and possibly a year earlier if the federal election is called before the end of 2018.

CORPORATES
AUSTRALIAN LABOR PARTY, MASTER BUILDERS AUSTRALIA INCORPORATED, STOCKLAND – ASX SGP, PROPERTY COUNCIL OF AUSTRALIA LIMITED, HOUSING INDUSTRY ASSOCIATION LIMITED, CADENCE ECONOMICS PTY LTD, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE ENVIRONMENT AND ENERGY

Labor risks $12bn housing hit

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Original article by Simon Benson
The Australian – Page: 1 & 6 : 24-Oct-18

Independent modelling by Cadence Economics has examined the likely impact of Labor’s proposed negative gearing and capital gains tax reforms on the residential property market. It concludes that the policy could result in new dwelling commencements falling by between 10,000 and 42,000 over a five-year period. This would in turn reduce construction activity by up to $12bn over this period and result in between 7,500 and 32,000 fewer jobs in the sector. Master Builders Australia CEO Denita Wawn notes that housing approvals have peaked since Labor announced its policy two years ago.

CORPORATES
CADENCE ECONOMICS PTY LTD, AUSTRALIAN LABOR PARTY, MASTER BUILDERS AUSTRALIA INCORPORATED, AUSTRALIAN BUREAU OF STATISTICS

US, China trade war warning

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Original article by Simon Benson, David Uren
The Australian – Page: 1 & 4 : 10-Oct-18

The International Monetary Fund expects Australia’s economic growth to slow to just 2.8 per cent in 2019, citing the impact of the US-China trade war. However, the IMF now expects the domestic economy to expand by 3.2 per cent in 2018, which is slightly higher than its previous forecast. Federal Treasurer Josh Frydenberg says a resolution of the trade tensions between the US and China is in the interests of Australia and the world. The IMF has scaled back its global economic growth forecasts for both 2018 and 2019 to 3.7 per cent.

CORPORATES
INTERNATIONAL MONETARY FUND, AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, UNITED STATES. DEPT OF THE TREASURY, UNITED STATES. DEPT OF STATE, CHINA. MINISTRY OF COMMERCE