Australia: Weakness likely to persist – Standard Chartered
|Chidu Narayanan, economist at Standard Chartered, points out that Australia’s GDP growth slowed further in Q3 to 0.4% QoQ on slowing consumption and declining investment.
Key Quotes
“In y/y terms, growth picked up marginally to 1.7% from 1.6% but remains well below trend growth of c.3%. Government spending was the only source of strength in Q3; other components of growth (barring inventories) slowed from Q2.”
“We expect full-year 2019 growth to slow to a multi-decade low of 1.7%, picking up (due to a low-base) to a still-weak 2.2% in 2020.”
“We expect labour-market conditions to deteriorate sharply over the next few months as declining construction activity leads to significant job losses. The unemployment rate is likely to rise above 5.5%, weighing further on household consumption. Meanwhile, we see net exports subtracting from growth in the 2020 as they decline from a high base.”
“We expect two more 25bps rate cuts from the Reserve Bank of Australia (RBA), in February and Q2-2020, as growth slows further. We expect the central bank to embark on quantitative easing (QE) after hitting the cash rate floor of 0.25%; we expect this to come only at end-2020 or later.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.