Australia Mid-Year Economic and Fiscal Outlook (MYEFO) released today says the real GDP is seen rising as the drag from the mining investment diminishes.
Key points
- Real GDP is forecast to grow by 2½ percent in 2017-18 and 3 percent in 2018-19, compared to 2.0 percent achieved in 2016-17 and Budget forecasts of 2¾ percent and 3 percent for 2017-18 and 2018-19 respectively.
- Nominal GDP is forecast to grow by 3½ percent in 2017-18 and 4 percent in 2018-19.
- The 2017-18 forecast is lower compared with Budget, largely reflecting recent subdued outcomes for wage growth and domestic prices.
- Commodity prices remain a key uncertainty to the outlook for the terms of trade and nominal GDP.
- Household consumption is forecast to grow by 2¼ percent in 2017-18 and 2¾ percent in 2018-19.
- Growth in consumption is expected to pick up over the forecast period in response to strengthening labour market conditions.
- Business investment is expected to grow at a stronger pace than forecast at Budget. It is forecast to grow by 2 percent in 2017-18 and 3 percent in 2018-19.
- Growth in non-mining business investment was stronger than expected in 2016-17 and is forecast to remain solid at 5 percent in both 2017-18 and 2018-19.
- Exports are forecast to grow by 3 percent in 2017-18 and 4 percent in 2018-19.
- Imports are forecast to grow by 3 percent in 2017-18 and 2½ percent in 2018-19.
- Consumer prices are forecast to increase by 2 percent through the year to the June quarter 2018, before accelerating to 2¼ per cent through the year to the June quarter 2019.
- Budget deficit seen at AUD 23.6 billion.
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