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Tomorrow, we have an all-important release of Australian GDP for the December quarter. As we move towards the release time, here are the expectations from the economists of major banks regarding the same.

ANZ

Felicity Emmett, senior economist at ANZ, are expecting Australia’s Q4 GDP to have risen a soft 0.2% q/q, following the 0.3% q/q rise in Q3, which would see annual growth decline to 2.4%.

“GDP growth, at +0.2% q/q and +2.4% y/y, looks to be lower than the 2.8% annual growth the RBA forecast in its February Statement on Monetary Policy.”

“In tomorrow’s report, the focus will be on the household indicators – consumption and income. Weak retail sales volumes (+0.1%) point to relatively modest growth in consumer spending. While retail spending accounts for only around 30% of consumption, ongoing weakness in car sales, falling house prices and tighter credit conditions will all weigh on consumer spending. We will be watching the GDP measure of average wages. Preliminary data suggest this is likely to continue to be lacklustre”

Standard Chartered

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.

“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.”

Westpac

Andrew Hanlan, analyst at Westpac, suggests that the Australian National Accounts, to be released on Wednesday March 6, will provide an estimate of economic activity for the December quarter and they are expecting that for the December quarter, Australian real GDP will grow by 0.2%, slowing annual growth to 2.4%.

“The partials suggest / reveal that: retail sales stalled (+0.1%, including a -1.1% for NSW); construction activity declined sharply, -3.1% (a sizeable fall in housing, sharp drop in public works and softness in business); and exports likely stalled (dented by rural goods reflecting the ongoing drought).”

“National income is a point of strength and the December quarter was a positive one. Commodity prices moved higher and the terms of trade increased by 2.5%qtr, 5.5%yr we estimate. Nominal GDP growth is a forecast 1.0%qtr, 5.4%yr.”

“For 2019, we expect GDP growth to be around 2.2%, with: consumer spending sluggish; home building activity contracting sharply; business equipment spending weak (in part due to uncertainty around the Federal election); but strength in government demand and a positive contribution from net exports, led by LNG (additional capacity) and services (strong demand from the Asian region and supported by the low Australian dollar).”

NAB

Analysis team at NAB is expecting the Australian Q4 GDP to confirm a softening trend, recording another soft print of 0.4% in the quarter to be 2.6% higher over the year.

“With growth projected to slow, amidst remaining spare capacity in the economy, we see rates on hold for an extended period. While this release is unlikely to trigger an immediate shift on rates, it will provide another marker on the growth front which may lead to an eventual reassessment of the future growth path by the RBA, particularly if weaker growth flows through to labour market conditions.”

“Looking forward, we see the economy supported by public sector spending, a rise in LNG exports and healthy growth in business investment. Offsetting these supports, consumption is likely to only grow modestly and dwelling investment is expected to fall.”