Australia: Contraction in Q3 GDP represented a payback - BNPP

The contraction in Australia’s Q3 GDP represented a payback after unsustainably rapid growth earlier in the year, but also dragged official trend growth to a 17-year low as noted by the Research Team at BNP Paribas. 

Key Quotes

“Downside risks overhang the domestic outlook – softer labour conditions threaten to undermine spending, business capex will be weak and residential investment is set to fade.”

“Nonetheless, we remain optimistic the double whammy from expanded capacity and higher commodity prices will see resource exports push GDP growth up to 3% in 2018.”

“Aggregate growth should thus be sufficiently strong to allow the RBA to leave rates on hold, but with domestic uncertainties leaving risks skewed toward further easing.”