ECONOMIC FORECASTING – AUSTRALIA

Fear grows AAA rating to be lost

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Original article by David Uren
The Australian – Page: 1 & 5 : 20-Oct-16

Treasury secretary John Fraser has warned that every Australian would be affected by a downgrade of the nation’s "AAA" credit rating. The Federal Government is hopeful that the mid-year budget update will feature a modest decline in the deficit, although there are concerns that this may not be sufficient to avert a rating downgrade. Craig Michaels of S&P Global Ratings has reiterated the need for the Government to implement budget savings measures. Meanwhile, Treasury is not expected to take into account the recent rise in coal prices when preparing economic forecasts for the mid-year update.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, S&P GLOBAL RATINGS, AUSTRALIAN LABOR PARTY, NICK XENOPHON TEAM

ASX to hit 6000 in ’17, says Credit Suisse

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Original article by Vanessa Desloires
The Australian Financial Review – Page: 25 : 18-Oct-16

Hasan Tevfik of Credit Suisse believes that the Australian sharemarket’s "profits recession" of the last several years has ended, which will be reflected in the market’s outlook. Credit Suisse expects the benchmark S&P/ASX 200 to reach the 6,000-point level by the end of 2017, buoyed by single-digit growth in earnings per share over the next year. Meanwhile, Matthew Sherwood of Perpetual is upbeat about the outlook for the economy, forecasting a rise in GDP growth over the next 12 months.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, CREDIT SUISSE (AUSTRALIA) LIMITED, PERPETUAL LIMITED – ASX PPT, ANSELL LIMITED – ASX ANN, BLUESCOPE STEEL LIMITED – ASX BSL, CALTEX AUSTRALIA LIMITED – ASX CTX, COMPUTERSHARE LIMITED – ASX CPU, FORTESCUE METALS GROUP LIMITED – ASX FMG, LEND LEASE GROUP LIMITED – ASX LLC, MAQUILADORA PARTNERSHIP, MYER HOLDINGS LIMITED – ASX MYR

Trade surge could cut $23b from deficit

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Original article by Jacob Greber
The Australian Financial Review – Page: 4 : 14-Oct-16

Australia’s 2016-17 Budget deficit is forecast to be $A63.2bn, but analysis shows that a sustained rise in commodity prices could slash the deficit by around $A23bn. The prices of coking coal, thermal coal and iron ore have risen sharply since August 2016, and Commonwealth Bank economist Kristina Clifton says the nation’s terms of trade would improve if prices remain at around current levels for the next six months. She adds that this would also have a flow-on effect on household incomes.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. DEPT OF THE TREASURY, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

$100bn hit to deepen budget debt crisis

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Original article by David Uren
The Australian – Page: 1 & 4 : 19-Aug-16

Chris Richardson of Deloitte Access Economics has warned that the Federal Budget may remain in deficit for some time. The Treasury has forecast that net debt will peak at $A356bn before falling to around $A335bn in 2021-22. However, Richardson’s analysis suggests that net debt could rise to $A440bn by 2021-22 if the nation records nominal GDP growth of 3.5 per cent and the Senate continues to reject the Government’s proposed spending cuts. May 2016 Budget forecasts are based on nominal GDP rising from 2.5 per cent in 2015-16 to five per cent by 2017.

CORPORATES
DELOITTE ACCESS ECONOMICS PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, STANDARD AND POOR’S CORPORATION, RESERVE BANK OF AUSTRALIA

Over-55s could add $78b in GDP

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Original article by Lucille Keen
The Australian Financial Review – Page: 7 : 25-Jul-16

A new study by PwC shows that Australia is ranked 16th among OECD nations in terms of retaining older employees in the workforce. The PwC Golden Age Index estimates that the nation’s GDP could be boosted by 4.7 per cent by ensuring that more older people – particularly the 55+ age group – remain in the workforce. This would equate to an annual increase in GDP of about $A78bn. Jeremy Thorpe of PwC warns that it would take about 10 years to achieve such an increase in GDP via measures aimed at lifting workforce participation among older age groups.

CORPORATES
PRICEWATERHOUSECOOPERS, ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, AUSTRALIA. DEPT OF HUMAN SERVICES. CENTRELINK, UNIVERSITY OF MELBOURNE

Tax cut gain ‘twice cost to the budget’

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Original article by David Crowe
The Australian – Page: 1 & 6 : 8-Jun-16

Research by Chris Murphy of Independent Economics has concluded that the Australian Government’s proposal to progressively reduce the company tax rate will have significant economic benefits. Murphy has estimated that the "consumer benefit" from the tax cuts will be around $A2.39 for every $A1.00 in forgone revenue. Murphy has also rejected suggestions that the tax cuts will boost the after-tax profits of offshore investors.

CORPORATES
INDEPENDENT ECONOMICS, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN NATIONAL UNIVERSITY, AUSTRALIAN LABOR PARTY, GRATTAN INSTITUTE, THE AUSTRALIA INSTITUTE LIMITED, AUSTRALIAN GREENS, CHAMBER OF COMMERCE AND INDUSTRY OF WESTERN AUSTRALIA (INCORPORATED)

Morrison worried about growth

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Original article by Jacob Greber, Mark Mulligan
The Australian Financial Review – Page: 1 & 4 : 31-May-16

Economists forecast that the Australian economy expanded by just 0.6 per cent in the March 2016 quarter. Data to be released on 31 May is tipped to show GDP growth of 2.7 per cent year-on-year during the quarter, compared with three per cent previously. Treasurer Scott Morrison has used the slowing economy to defend the Federal Government’s push to reduce the corporate tax rate. He has also criticised Opposition Leader Bill Shorten for opposing tax cuts that would stimulate economic activity.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, AUSTRALIAN BUREAU OF STATISTICS, RESERVE BANK OF AUSTRALIA

Low wage growth sparks bleak outlook

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Original article by David Uren
The Australian – Page: 7 : 19-May-16

The Department of the Treasury will release its pre-election economic and fiscal outlook on 20 May 2016. It is not expected to make any significant changes to the forecasts in the May 2016 Budget, although the outlook report is likely to highlight the risks to the Budget if the forecasts are not met. Slowing wages growth is looming as a key risk for the Budget, which has forecast wages growth of 2.25 per cent in 2015-16 and 2.5 per cent in 2016-17. Wages grew by just 2.1 per cent over the last year.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AMP LIMITED – ASX AMP, JP MORGAN AUSTRALIA LIMITED, AUSTRALIAN LABOR PARTY

Treasury’s medium-term price forecast paints unsettling picture

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Original article by Geoff Winestock
The Australian Financial Review – Page: B13 : 4-May-16

The Australian Government’s May 2016 Budget forecasts include a 1.35 per cent increase in the nation’s terms of trade in 2016-17. The Mid-Year Economic and Fiscal Outlook had forecast a 2.25 per cent decline in the terms of trade. Meanwhile, the Treasury has upgraded its forecast for the iron ore price in 2017 from $US39 per tonne to $US55. The price of metallurgical coal has been upgraded from $US73 per tonne to $US91.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY

Brace ‘for another $129b’ in deficits

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Original article by Jacob Greber
The Australian Financial Review – Page: 4 : 26-Apr-16

Chris Richardson of Deloitte Access Economics expects the Australian Government to announce a 2016 Budget deficit of $A41.7bn, compared with $A37.9bn in 2015. It would also be $A4.3bn higher than the Government had forecast in the mid-year Budget update. Richardson downplays the impact of the recent rally in the iron ore price on the deficit, arguing that slowing growth in wages will have a bigger effect on government revenue.

CORPORATES
DELOITTE ACCESS ECONOMICS PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. DEPT OF FINANCE, AUSTRALIAN LABOR PARTY