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NAB research team expects Australian growth to be supported by government spending (infrastructure and NDIS), growing commodity exports and private business investment in the course of next two years.

Key Quotes

“Against that, we expect consumption growth to weaken and dwelling investment to fall. Indeed both our Business survey and internal NAB data point to continued consumer weakness in the early part of 2019.”

“Overall our key forecasts remain unchanged with GDP growth of 2.4% in 2019 and 2.2% in 2020 – with a more marked slowdown in the through the year numbers (2.7% and 2.2% respectively).”

“Our outlook for the labour market and inflation are broadly unchanged. The most significant change to our forecasts this month is the outlook for interest rates. We no longer expect the RBA to increase rates in H2 2019, and expect rates to remain on hold with growth slowing but the labour market still tightening and inflation and wage growth beginning to lift.”

“Should labour market conditions deteriorate in these circumstances, the RBA will likely act sooner – rather than later – to lower the cash rate.”