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
Australia’s top 20 suburbs for property investment revealed
NSW has the most investment opportunities, according to ME Bank, but a Brisbane suburb has taken out the top spot. ...Read more
Property
CBA forecasts 10% house price drop for 2023
The Commonwealth Bank is the most negative of the majors on property prices. ...Read more
Property
Buying an apartment? Ask this first
If you’re looking to buy an apartment, there are a few things you need to consider. ...Read more
Property
What to look for in a rentvesting apartment
Rentvesting demands potential property investors think more strategically about their purchases. ...Read more
Property
FHBs should weigh the pros and cons before buying an apartment
If you’re considering an apartment as your first property purchase, you probably aren’t the only one. ...Read more
Property
Why first home buyers might want to consider an apartment over a house
Cost and location can play in favour of first home buyers when it comes to apartments. ...Read more
Property
1 in 2 Aussies can’t afford an interest rate rise
Aussies are increasingly unlikely to meet their loan commitments if rates lift, new research has shown. ...Read more
Property
Ageing homes account for one-fifth of Australia’s emissions
Almost eight million Australian homes remain energy-inefficient, leading to calls for a large-scale redevelopment program. ...Read more
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
How the post-lockdown period will influence property, what the soaring NFT market means, and defining financial wellness
Listen now
APRA’s mortgage crackdown, the power of DeFi and last-minute tax tips
Listen now
Property
Australia’s top 20 suburbs for property investment revealed
NSW has the most investment opportunities, according to ME Bank, but a Brisbane suburb has taken out the top spot. ...Read more
Property
CBA forecasts 10% house price drop for 2023
The Commonwealth Bank is the most negative of the majors on property prices. ...Read more
Property
Buying an apartment? Ask this first
If you’re looking to buy an apartment, there are a few things you need to consider. ...Read more
Property
What to look for in a rentvesting apartment
Rentvesting demands potential property investors think more strategically about their purchases. ...Read more
Property
FHBs should weigh the pros and cons before buying an apartment
If you’re considering an apartment as your first property purchase, you probably aren’t the only one. ...Read more
Property
Why first home buyers might want to consider an apartment over a house
Cost and location can play in favour of first home buyers when it comes to apartments. ...Read more
Property
1 in 2 Aussies can’t afford an interest rate rise
Aussies are increasingly unlikely to meet their loan commitments if rates lift, new research has shown. ...Read more
Property
Ageing homes account for one-fifth of Australia’s emissions
Almost eight million Australian homes remain energy-inefficient, leading to calls for a large-scale redevelopment program. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
