Australia: Relatively weak growth ahead - NAB

According to analysts at NAB, ahead of the Q1 national accounts of Australian economy which are to be released next month, they have left their forecasts largely unchanged with the exception of a weaker inflation outlook.

Key Quotes

“We still see relatively weak growth, low inflation and a stable-to-deteriorating labour market over the next couple of years. Consumption will likely only grow modestly on the back of household restraint and dwelling investment is likely to decline substantially as the housing market continues to cool.”

“Against this, we expect exports to support growth in the near term, with growth in public demand and strength in the business sector to support growth further out. That would see employment growth slow and a small deterioration in the unemployment rate from 2020. With remaining spare capacity in the labour market and the economy more broadly, we expect inflationary pressure to remain weak, only building to the bottom of the RBA’s target band by the end of 2021.”

“In this environment while we expect a series of imminent rates cuts - we have moved the timing forward to June and August. We also see the need for additional monetary stimulus in early 2020. In brief, there is little constraint from the risk of high inflation, but there is a need to see faster rates of growth and lower unemployment.”