Australia: Economy likely to grow at 2.9% in 2018 – NAB

Analysts at NAB expect growth of 2.9% in 2018 and 2019 for Australian economy before slowing to 2.6% in 2020.

Key Quotes

“In the near-term, growth will be driven by increasing LNG exports, strong growth in public sector investment and a pickup in private business investment growth which will continue the handover from the mining sector. Against this, we expect mining investment to continue to fall – though at a declining rate.”

“We expect dwelling investment to also weigh on growth, and the outlook for the consumer to remain weak. While our forecasts remain unchanged, we believe a number of new risks have emerged. On the upside – as evident in the NAB Monthly Business Survey – conditions remain favourable in the mining sector and it appears there may be some new investment. Against this the outlook for the consumer remains highly uncertain.”

“A slowing in employment growth recently may result in a slower pickup in wage growth and ultimately consumer confidence. Also forward orders have come off significantly in recent months.”

“We continue to expect the first rate increase by the RBA to occur around mid-2019 though this remains highly data dependent. Overall the risks are building that the RBA may be on hold for longer.”