Australia: Economic growth expected to oscillate through 2017 - NAB

The research team at NAB, expects Australian economic growth to oscillate through 2017, with partial indicators suggesting very modest growth in Q1, Q2 heavily affected by Cyclone Debbie and then Q3 and Q4 forecast to surge on LNG exports, a rebound in cyclone-affected coal exports and reduced drag from mining investment (GDP growth forecast at 2.3% in annual average terms).

Key Quotes

“Momentum will slow through 2018 as dwelling construction and LNG exports both peak (growth at 2.8% in annual average terms but slowing to 2.3% in through the year terms by Dec-18). Household spending will remain subdued amidst low household income growth, while business investment improves and solid government spending provides an offset.”

“A moderate recovery in domestic demand is then expected in 2019. Against a backdrop of below-target inflation and elevated unemployment, policy makers are unlikely to address their concern about household balance sheets via interest rates, with further macro-prudential measures possible. We expect the RBA to remain on hold for an extended period, before some small hikes in late 2019 as domestic demand improves.”