Australia: Private spending set to exit the slow lane – ANZ

ANZ analysts suggest that after a disappointing year, they are expecting a gradual pick-up in Australia’s GDP growth through 2020 and 2021.

Key Quotes

“Underpinning the recovery will be a rotation of growth drivers, away from the public and external sectors and towards domestic private demand growth.”

“The key to the turnaround in the private sector is a (modest) recovery in consumer spending. We expect consumption to improve gradually helped by the earlier tax cuts, previous and expected rate hikes, as well as the recovery in house prices. High debt and low wage growth will continue to be a headwind.”

“The recovery in growth won’t be soon or strong enough to prevent further upward pressure on the unemployment rate. This will keep the RBA in easing mode until mid-2020. A modest improvement in the labour market in H2 is likely to keep unconventional monetary policy measures off the table.”