Hoarded cash to drive recovery

Original article by Tom Dusevic
The Australian – Page: 1 & 6 : 22-Sep-21

The OECD now expects the Australian economy to grow by four per cent in 2021. The Paris-based organisation had previously forecast in May that the domestic economy would expand by 5.1 per cent in 2021 as it recovered from the COVID-19 pandemic. However, the Commonwealth Bank says economic activity will be boosted as households begin spending about $230bn worth of savings they have accumulated during the pandemic. The minutes of the Reserve Bank of Australia’s latest board meeting show that it is also upbeat about the long-term economic outlook, despite expectations that GDP will fall and unemployment will rise in the September quarter.

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ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA

RBA lauds $50bn budget boost

Original article by Patrick Commins
The Australian – Page: 1 & 4 : 21-Apr-21

The federal government had forecast a $198bn Budget deficit for 2020-21 in its mid-year economic and financial outlook. The Department of Finance has advised that the Budget bottom line improved by $23bn during the first eight months of the financial year; some economists now expect the full-year deficit to be about $50bn lower than had been forecast in December. Meanwhile, the Reserve Bank of Australia says the strong economic rebound has seen national GDP growth return to its pre-pandemic level. The RBA reiterated in the minutes of its monthly board meeting that the cash rate is likely to remain on hold until at least 2024.

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AUSTRALIA. DEPT OF FINANCE, RESERVE BANK OF AUSTRALIA

Covid laggards beat Aussies to top of the class for economic performance

Original article by Patrick Commins
The Australian – Page: 6 : 21-Dec-20

Data from the OECD shows that Australia’s real GDP contracted by 4.2 per cent over the first nine months of 2020. In contrast, real GDP in the US and Brazil declined by just 3.5 per cent and 4.1 per cent respectively during this period, despite the fact that they have been hit much harder by COVID-19 case numbers and deaths. The economies of many countries also rebounded more quickly in the September quarter than Australia, despite having been hit harder in the June quarter. Elliot Clarke of Westpac attributes this to Australia’s tougher lockdown restrictions and the second wave in Victoria.

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ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, WESTPAC BANKING CORPORATION – ASX WBC

Moody’s sticks to AAA rating

Original article by John Kehoe, Phillip Coorey
The Australian Financial Review – Page: 1 & 6 : 24-Jun-20

Moody’s Investors Service expects the Australian economy to contract by five per cent in 2020 due to the impact of the coronavirus pandemic. Moody’s notes that the fall in GDP growth will be lower than many other developed nations, and it expects Australia to return to positive growth in 2021. Moody’s has also affirmed Australia’s AAA credit rating; rivals S&P Global Ratings and Fitch have previously placed the nation’s credit rating on negative outlook, but Australia is only one of 10 nations that have an AAA rating from all three agencies. Treasurer Josh Frydenberg has described this as an "expression of confidence" in the federal government’s handling of the health crisis.

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MOODY’S INVESTORS SERVICE INCORPORATED, S&P GLOBAL RATINGS, FITCH RATINGS LIMITED, AUSTRALIA. DEPT OF THE TREASURY

Less gloomy Treasury flags faster recovery

Original article by Matthew Cranston
The Australian Financial Review – Page: 4 : 10-Jun-20

Treasury secretary Steven Kennedy has told a Senate inquiry that Australia’s unemployment rate is now likely to peak at around eight per cent as the economy begins to re-open and coronavirus lockdown restrictions are eased. The Treasury had previously forecast that the impact of the pandemic would cause the jobless rate to reach 10 per cent by June. Australia’s official unemployment rate is currently 6.2 per cent. Kennedy also said the impact of the pandemic on GDP growth will also not be as severe as initially forecast.

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AUSTRALIA. DEPT OF THE TREASURY

Cost of beating virus: recession

Original article by Patrick Commins,Geoff Chambers
The Australian – Page: 1 & 4 : 4-Jun-20

Treasurer Josh Frydenberg has confirmed that the Australian economy is in recession for the first time in 29 years. GDP data shows that the economy contracted by 0.3 per cent in the March quarter, while economic growth slowed from 2.2 per cent to 1.4 per cent in the year to March. Frydenberg has also warned that the economic contraction in the June quarter will be much worse; economists expect GDP growth to fall by 6-9 per cent as the full impact of the coronavirus lockdown restrictions took effect. Meanwhile, the federal government has delayed its mini-budget until 23 July, which will allow it to assess how the economy fares after lockdown restrictions are fully lifted.

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AUSTRALIA. DEPT OF THE TREASURY

Australia recession: Graph that rings economists’ alarm bells

Original article by Samantha Maiden
News.com.au – Page: Online : 4-Jun-20

The national accounts data shows that Australia’s household saving rate rose slightly to 5.5 per cent in the March quarter, its highest level since the September 2016 quarter. Callam Pickering, the chief economist at Indeed, says data indicating that people are earning less and saving more is often the cause of a recession. He adds that encouraging households and businesses to return to pre-coronavirus spending levels will be a major challenge as lockdown restrictions are lifted. The official data also show that total consumption fell by 1.1 per cent in the three months to March, which is the biggest quarterly decline in more than three decades.

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INDEED INCORPORATED,AUSTRALIA. DEPT OF THE TREASURY

Depth of downturn less than expected

Original article by Adam Creighton
The Australian – Page: 2 : 3-Jun-20

Australia has recorded a trade surplus of $19.2bn for the March quarter, and a current account surplus of $8.4bn. The result was driven by strong growth in export volumes and a fall in imports due to the impact of the pandemic. Meanwhile, the median forecast of economists is for GDP growth to have contracted by 0.4 per cent in the quarter, with official data to be released on 3 June. Reserve Bank governor Philip Lowe has suggested that the coronavirus-induced economic downturn may prove be less severe than initially expected.

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RESERVE BANK OF AUSTRALIA

Australia could avoid technical recession fate

Original article by William McInnes
The Australian Financial Review – Page: 21 : 1-Jun-20

Most economists expect GDP data to be released on 3 June will show that the Australian economy contracted in the March quarter. However, five of the 24 economists polled by Bloomberg believe that Australia recorded positive GDP growth for the period, despite the impact of summer bushfires and the coronavirus pandemic. Phil Odonaghoe of Deutsche Bank expects the economy to avoid a technical recession, although David Plank of the ANZ Bank contends that this is moot given that nearly 20 per cent of Australians are unemployed or underemployed.

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BLOOMBERG LP, DEUTSCHE BANK AG, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Treasurer concedes coronavirus economic figures sobering as Australia faces largest deficit in history

Original article by Brett Worthington
abc.net.au – Page: Online : 13-May-20

Treasurer Josh Frydenberg used an economic update on 12 May to advise of a blowout in the budget deficit. He revealed that the underlying cash deficit was $22.4bn at the end of March; this is nearly $10bn higher than the federal government had forecast in its mid-year Budget update in December. Frydenberg has not revealed the likely size of the deficit for 2019-20, but Chris Richardson of Deloitte Access Economics expects the next two budgets to feature the biggest deficits on record. Treasury expects GDP to fall by at least 10 per cent in the June quarter due the coronavirus pandemic, while household consumption is forecast to fall by about 16 per cent.

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AUSTRALIA. DEPT OF THE TREASURY