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.”
Property
Why it now costs 130% more to service a mortgage than 3 decades ago
The lifetime cost of owning a home has increased by over 130 per cent in just three decades, new research has revealed. ...Read more
Property
Using the 30/30/3 rule for home buying during uncertain times
Thinking of buying a home? Uncertain economic times may have you double guessing your purchase, but the 30/30/3 rule can help you make this a reality. ...Read more
Property
Rental yields reach decade high, but not all markets move at the same pace
Changing consumer preferences towards lifestyle destinations and a lack of supply have led to record national price growth, albeit price fluctuations vary region-to-region, fresh figures show. ...Read more
Property
What younger Australians are getting wrong about home loans
As young Australians look to fight the odds and take their first step onto the property ladder, more and more are making easy mistakes. ...Read more
Property
More than 1 in 3 Aussie properties are cheaper to buy than rent
Having a mortgage is even more likely to be cheaper than renting than it was pre-pandemic, new research has revealed. ...Read more
Property
How will the moratorium on evictions impact landlords and tenants?
The NSW government has announced a 60-day moratorium on evictions, with landlords gifted incentives to reduce the burden on COVID-19-affected tenants. ...Read more
Property
Young renters cry out against ‘lack of respect’ in rental market
Young Australians have expressed dismay over the perceived discrimination within the rental market as the wealth divide forces them into long-term renting. ...Read more
Property
Note investing: A way into the property market for younger Australians?
As the traditional route into the housing market becomes more difficult, could unorthodox alternatives like note investing bridge the gap? ...Read more
Do lockdowns boost property prices? Are short-sellers levelling the playing field? Did you lodge your tax returns early?
Listen now
Will lockdowns halt the housing boom? Is the metaverse taking over? And the cons of lodging your tax returns early
Listen now
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Are property prices set to crash? Should you jump on board the fintok craze? And how to prepare for this tax time
Listen now
Property
Why it now costs 130% more to service a mortgage than 3 decades ago
The lifetime cost of owning a home has increased by over 130 per cent in just three decades, new research has revealed. ...Read more
Property
Using the 30/30/3 rule for home buying during uncertain times
Thinking of buying a home? Uncertain economic times may have you double guessing your purchase, but the 30/30/3 rule can help you make this a reality. ...Read more
Property
Rental yields reach decade high, but not all markets move at the same pace
Changing consumer preferences towards lifestyle destinations and a lack of supply have led to record national price growth, albeit price fluctuations vary region-to-region, fresh figures show. ...Read more
Property
What younger Australians are getting wrong about home loans
As young Australians look to fight the odds and take their first step onto the property ladder, more and more are making easy mistakes. ...Read more
Property
More than 1 in 3 Aussie properties are cheaper to buy than rent
Having a mortgage is even more likely to be cheaper than renting than it was pre-pandemic, new research has revealed. ...Read more
Property
How will the moratorium on evictions impact landlords and tenants?
The NSW government has announced a 60-day moratorium on evictions, with landlords gifted incentives to reduce the burden on COVID-19-affected tenants. ...Read more
Property
Young renters cry out against ‘lack of respect’ in rental market
Young Australians have expressed dismay over the perceived discrimination within the rental market as the wealth divide forces them into long-term renting. ...Read more
Property
Note investing: A way into the property market for younger Australians?
As the traditional route into the housing market becomes more difficult, could unorthodox alternatives like note investing bridge the gap? ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
