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Chidu Narayanan, economist at Standard Chartered, suggests that they have lowered their Q4 GDP growth forecast of Australian economy to 2.5% y/y (0.2% q/q) from 2.8% y/y (0.5% q/q) to reflect the softer prints.

Key Quotes

“We expect household consumption to have also dropped moderately from Q3, adding only 0.1ppt to q/q growth. Retail sales rose 0.38% q/q in Q4, lower than the 0.43% q/q in Q3.”

“Full-year 2018 growth likely fell to 2.8% y/y. We expect growth to slow down further in 2019 to 2.7% y/y, driven by a likely contraction in Q3-2019, on slowing construction activity.”

“We believe the Reserve Bank of Australia (RBA) is likely to look through any weakness in growth, noting that the outlook for growth looks steady. The RBA will likely continue to look for wage growth to improve (albeit mildly), which would support consumption. We expect the RBA to maintain a neutral outlook in H1. Deterioration of data in H2, in the construction space, spilling over to the labour market is likely to drive rate cuts. We expect two rate cuts from the RBA in November and December.”