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Analysts at NAB suggest that their outlook for the Australian economy is unchanged from last month, though they believe the balance of risks may be shifting to the downside.

Key Quotes

“Growth is expected to rise to just under 3.0% in 2018 and 2019 before slowing a little in 2020. Rising commodity exports, public infrastructure investment and a recovery in non-mining business investment are expected to drive growth.”

“Our outlook for the consumer remains weak, given the headwinds faced by the household sector. The unemployment rate (and spare capacity) is expected to decline gradually, which should see a gradual increase in the pace of wage growth and eventually be passed through to inflation more generally.”

“For now we have left our outlook for rates unchanged, but should the building risks in business sector materialise or wages/inflation growth pickup more slowly than expected, any increase in interest rates could well be delayed. Indeed, recent wage and CPI data suggest inflation pressures remain relatively meek, as do the RBA forecasts updated in the August SMP.”