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According to analysts at NAB, new risks are emerging for Australian economy and need to be watched.

Key Quotes

“We still expect GDP to increase by around 2.9% in 2018 with strength from mining exports (LNG), public sector infrastructure   investment and a likely flow on to further strength in private investment.”

“We continue to be concerned about the outlook for consumption where wages growth remains subdued (with unemployment still well above the NAIRU), electricity prices high , stalling housing wealth – especially if the authorities effectively tighten credit supply – and high debt levels.”

“There are also new downside risks in the outlook.   First is the increasing potential for trade wars to lower global growth and reduce Australian prospects.”

“Finally there are some emerging signs of softness in the leading indicators on employment growth – albeit our Survey reading would still imply employment growth over the next 6 months of around 20k per month enough to modestly lower unemployment.”

“At this stage we are inclined to still see the balance of risks as neutral but possibly a touch to the downside.   Overall we see upside risks from commodity exports, and infrastructure   offset by risks from consumption. For 2019 we expect growth of 2.9% and 2.6% in 2020.”

“At this stage we also still see the RBA starting to increase rates from mid 2019 – but this is very data dependent and it could well be that the timing may be delayed.”