Australia: Economic growth likely to be 2.9% in 2018 - NAB

Analysts at NAB, suggests that they are gradually becoming more confident that infrastructure spending and non-mining business investment should help the Australian economy navigate the challenges of peaking LNG exports and dwelling construction.

Key Quotes

“We are forecasting economic growth of 2.9% in 2018 and 2.8% in 2019 in annual average terms, suggesting an economy which manages to grow slightly above potential. Tepid consumer spending amidst low and only gradually rising wages growth however tempers the outlook, and is a key uncertainty for monetary policy.”

“If unemployment continues to drift lower and wages gradually higher as anticipated, we believe the RBA will have enough confidence that inflation will eventually pick up towards the bottom of the band. Acting in anticipation of this would be appropriate and we forecast two 25bp rate hikes in August and November, although we acknowledge the risks are that these hikes could be delayed.”