Invest
Aussie growth predicted to weaken in mid-term
Investors are being told to brace themselves for tougher economic conditions, with annual growth forecast to drag as the Australian economy restructures following the mining boom.
Aussie growth predicted to weaken in mid-term
Investors are being told to brace themselves for tougher economic conditions, with annual growth forecast to drag as the Australian economy restructures following the mining boom.
Economic forecaster BIS Shrapnel expects GDP growth to ease to 2.8 per cent in the next 12 months, with weakened growth expected as the Australian economy transitions.
BIS Shrapnel senior economist Richard Robinson says that while households still hold a healthy cushion of savings to help offset weak wages and employment, annual GDP growth could slow to a low of 2.1 per cent in 2018-19.
“Growth will again weaken over the subsequent two years as mining investment continues to decline, as residential building runs out of steam and falls sharply, and as parts of non-dwelling building plateau. The main contributor to growth at that time will be rising public infrastructure investment,” Mr Robinson said.
“Accordingly, we expect employment growth to slow and households to react to slower jobs growth and weaker residential property prices by reeling in discretionary spending. Meanwhile, soft growth in output, wages, employment, and household incomes will continue to contain underlying inflation despite the fall in the dollar.”
However, BIS Shrapnel forecasts that this economic lull will be followed by a decade-long rebound, beginning with 3 per cent growth in 2019-20
BIS Shrapnel’s analysis found that the Australian economy has performed relatively well as it manages its transition away the mining boom.
“Australia was saved by the strengthening of growth in resources exports and production, albeit at lower prices. While domestic demand and incomes are still weak, production growth remains solid, softening the shock of the mining investment downturn,” it noted.
“Given the magnitude of the shocks we have to weather, this is a pretty good outcome.”
Central to this rebound will be the valuation of the Australian dollar returning to around 70 cents after a couple of years above parity to the greenback.
“The dollar is the key to Australia’s competitiveness. It’s not productivity growth or wage inflation that do the damage. Those influences are swamped by movements in the currency. Through the period of the mining boom, the resultant high dollar and its impact on competitiveness put enormous pressure on Australian export and import-competing industries,” Mr Robinson said.
“The 25 to 30 per cent fall in the Australian dollar over the past three years has helped competitiveness. It’s now low enough to stimulate recovery in some of the more competitive dollar-exposed industries, notably tourism and education services, and that will broaden.”
RELATED ARTICLES
Property
Twice the demand: the case study behind Melbourne’s first‑home buyer surge
Melbourne has quietly engineered one of Australia’s most consequential housing turnarounds, with first‑home buyer demand running at roughly double the national pace and four of the top five buyer ...Read more
Property
First‑home buyers now anchor Australia’s mortgage growth — but the risk maths is changing
Great Southern Bank’s revelation that nearly one in three of its new mortgages went to first‑home buyers is not an outlier. It is the leading edge of a broader market realignment powered by government ...Read more
Property
Home guarantee scheme shake-up challenges Australia’s housing market players
From 1 October 2025, the expanded Home Guarantee Scheme (HGS) materially widens what first-home buyers can purchase and where. By sharply lifting price caps and relaxing eligibility settings, the ...Read more
Property
GSB’s first‑home buyer play: turning policy tailwinds into market share
Great Southern Bank’s latest results show that nearly one in three of its new mortgages now go to first‑home buyers—evidence of a fast‑moving market reshaped by government guarantees, easing rates and ...Read more
Property
Why investors are fleeing and renters are scrambling in Australia's housing maze
Australia’s rental market is tightening even as individual landlords sell down. New data points to a multi‑year investor retreat tied to higher holding costs and regulatory uncertainty, while prices ...Read more
Property
Australia's 5% deposit guarantee: Unlocking gains while balancing risks in the market share race
Can a bigger government guarantee fix housing access without fuelling prices? Australia is about to find out. The Albanese government’s expanded 5% deposit pathway aims to help 70,000 buyers, remove ...Read more
Property
Australia's bold move the 5% deposit scheme shaking up the housing market
Can a government guarantee replace lenders mortgage insurance without inflating prices or risk? Canberra’s accelerated 5% deposit scheme is a bold demand-side nudge in a supply‑constrained marketRead more
Property
When rates drop but stress sticks: exploring Australia's mortgage arrears dilemma
Headline numbers suggest arrears ease as rates come down. The reality in Australia is messier: broad measures dipped into mid‑2025, yet severe delinquencies and non‑bank portfolios remain under ...Read more
Property
Twice the demand: the case study behind Melbourne’s first‑home buyer surge
Melbourne has quietly engineered one of Australia’s most consequential housing turnarounds, with first‑home buyer demand running at roughly double the national pace and four of the top five buyer ...Read more
Property
First‑home buyers now anchor Australia’s mortgage growth — but the risk maths is changing
Great Southern Bank’s revelation that nearly one in three of its new mortgages went to first‑home buyers is not an outlier. It is the leading edge of a broader market realignment powered by government ...Read more
Property
Home guarantee scheme shake-up challenges Australia’s housing market players
From 1 October 2025, the expanded Home Guarantee Scheme (HGS) materially widens what first-home buyers can purchase and where. By sharply lifting price caps and relaxing eligibility settings, the ...Read more
Property
GSB’s first‑home buyer play: turning policy tailwinds into market share
Great Southern Bank’s latest results show that nearly one in three of its new mortgages now go to first‑home buyers—evidence of a fast‑moving market reshaped by government guarantees, easing rates and ...Read more
Property
Why investors are fleeing and renters are scrambling in Australia's housing maze
Australia’s rental market is tightening even as individual landlords sell down. New data points to a multi‑year investor retreat tied to higher holding costs and regulatory uncertainty, while prices ...Read more
Property
Australia's 5% deposit guarantee: Unlocking gains while balancing risks in the market share race
Can a bigger government guarantee fix housing access without fuelling prices? Australia is about to find out. The Albanese government’s expanded 5% deposit pathway aims to help 70,000 buyers, remove ...Read more
Property
Australia's bold move the 5% deposit scheme shaking up the housing market
Can a government guarantee replace lenders mortgage insurance without inflating prices or risk? Canberra’s accelerated 5% deposit scheme is a bold demand-side nudge in a supply‑constrained marketRead more
Property
When rates drop but stress sticks: exploring Australia's mortgage arrears dilemma
Headline numbers suggest arrears ease as rates come down. The reality in Australia is messier: broad measures dipped into mid‑2025, yet severe delinquencies and non‑bank portfolios remain under ...Read more
