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Australia is set to slip into recession in 2020 while the Aussie dollar will find find support in fading USD strength, according to analysts at Standard Chartered Bank.

Key quotes

“We lower our growth forecast for Australia to 0.2% in 2020 (from 2.2% prior) following the more widespread coronavirus outbreak than earlier anticipated. We see negative quarterly GDP growth in Q1, Q2 and Q3, before a mild recovery in Q4.”

“We forecast average inflation at 1.8% in 2020 (from 2.1%) and 1.1% in 2021 (from 2.3%).”

“We expect the AUD to find support in fading USD strength as the Fed and global central banks step in with greater determination to push real yields lower and address other liquidity stresses.”