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The March quarter national accounts provided further confirmation that the Australian economy performed solidly over the past year but, areas of weakness persist and are likely to weigh on the outlook, according to analysts at Westpac.

Key Quotes

“Consumer spending is ‘slightly below trend’ over the year (2.9%). But even this sub-par pace appears unsustainable over the forecast period, with 2.5% more likely for 2018 and 2019 overall.”

“The turnaround in house price growth from 11.3%yr nationally a year ago to -1.5%yr currently, could also see negative spill-overs for consumer demand.”

“As to home building activity, this contracted by 5.0% in 2017, consistent with the decline in dwelling approvals from the historic highs of 2016. This downturn is set to accelerate into 2019.”

“All told, we expect GDP growth to moderate to 2.7% in the year to December 2018, then slip to a below trend 2.5% for December 2019.”