• Free Daily Newsletter
  • Get Premium
  • About
  • Partner Pages
  • Support & FAQs
  • Log in

The Mandarin

The Mandarin
The Mandarin
  • Premium
  • Careers
    • Search SES Jobs
    • Career Advice
  • News
  • Editors’ Picks
  • Portfolios
  • Events
  • Resource library
  • Small Logo
  • Premium
  • Careers
    • Search SES Jobs
    • Career Advice
  • News
  • Editors’ Picks
  • Portfolios
  • Events
  • Resource library
Home Portfolio Economy & Industry Economic outlook: what you need to know this year

Economic outlook: what you need to know this year

By The Mandarin

February 16, 2016

The general pessimism about Australia’s economic trajectory continued in 2015. As did the recession risk talk that first surfaced in 2013. But our economic resilience was once again on display.

When the Australian Bureau of Statistics finally rules a line under 2015 we should see an economy running at around 2½% per annum and an unemployment rate at year end below 6%. These are respectable outcomes for an economy facing an array of global and domestic headwinds. Nevertheless, economic growth rates were lower than expected at the start of the year. And the nominal economy was again much weaker than expected.

We expect the economy to grow by 2¾% in 2016. Such an outcome would be in line with our best guess on the new potential growth rate. As a result, we expect the unemployment rate to grind lower during 2016. Nevertheless, unemployment will remain relatively high. And wages growth should remain modest as a result. Contained wages growth should go hand‑in‑hand with restrained inflation outcomes.

chart4

Relative to the Australian consensus we see some upside potential on the growth front in 2016. The unemployment rate should undershoot the consensus as a result. Upside growth risks also mean modest upside risks to the low inflation consensus. From a market perspective our calls have the Reserve Bank on hold and longer-term interest rates and the AUD sitting below the consensus.

The risks and issues in the Australian economic outlook for 2016 are many and varied. As usual, it is easier to see the negatives rather than the positives. More unusually, we see more global threats than domestic issues in the mix. These issues revolve around …

The Federal Reserve

How far and fast will they move? The impact on United States markets and the economy? How emerging economies fair in an environment of higher US rates and a stronger USD? How lower oil prices interact with the Fed, emerging economies and geopolitical tensions more broadly? And what are the threats from an extended period of low rates and high liquidity?

China

The global economy is increasingly dependent on China. The risks from a structural and cyclical slowdown remain high. The structural slowdown component continues but the cycle should respond to policy stimulus.

New global themes

Emerging risks relate to how the Chinese current account surplus is recycled, the growing impact of Chinese financial markets on global markets, the completion of globalisation, the expansion of the services economy and the associated risks to trade, currencies and protectionism.

Income drag

The income drag from falling commodity prices and the growth drag from falling mining capex in Australia. Weak incomes are the one real risk of recession in Australia. But there are income opportunities as well.

Ongoing transition

The transition and some surprises. Is the residential construction boom over? Will non‑mining capex lift? Will infrastructure spending turn? And will the export and consumer growth “surprises” of 2015 persist?

Domestic challenges

How will the economy deal with drought pressures, a lower potential growth rate, the end of the house price boom, and rising financial risks?

The task for policymakers will remain as challenging as always. The RBA starts the year with a conditional easing bias. Risks remain with a rate cut. But we expect to end the year with a 2% cash rate (and a new governor). The pressures are there for fiscal repair at some point.

But the government’s decision to proceed with caution is the right one. A new leadership could see a change in direction in the May budget (and a federal election is due before year end).

Read the full CBA (PDF) report here

About the author
The Mandarin

By The Mandarin

The Mandarin staff journalists.

Companies: Commonwealth Bank

Partners: Commonwealth Bank

Tags: Asian economy Australian economy Commonwealth Bank economic forecasting Economic growth economic impact Economic indicators economic policy

Login
Please login to comment
0 Comments
Inline Feedbacks
View all comments
The Mandarin Premium

Canberra’s changed

Stay on top for only $5 a week

 

Get Premium Today

Already a subscriber? Login

By

Tuesday February 16, 2016
Avatar
Text size: A A A

Upcoming Events

14
Jul
Building Visibility + Influence for Women in the Public Sector – MASTERCLASS
29
Jul
Breakfast Briefing: Building and retaining the public sector workforce
03
Aug
Playing Bigger: Uplevelling Influence + Impact for Public Sector Leaders – ONLINE PROGRAM
15
Aug
CILT International Diploma in Logistics and Transport (Public-Sector)
15
Nov
Humanify HR Consulting – HR Leadership in Practice (HRLP)
View Calendar

Partner Content

Data-centric, not data centres: the future of digital citizen services
Promoted

Data-centric, not data centres: the future of digital citizen services

eBook: How to build a Healthy Performance Culture
Promoted

eBook: How to build a Healthy Performance Culture

Meeting in the middle: How governments and Indigenous communities can work together, differently
Promoted

Meeting in the middle: How governments and Indigenous communities can work together, differently

Latest Jobs


  • Chief Executive Officer, Department of the Chief Minister and Cabinet

    Northern Territory Government

    • NT CBD
    Closing date 30th July, 2022
    2 days ago Full Time - Ongoing
  • Head of Programs

    Cranlana Centre for Ethical Leadership at Monash University

    • VIC CBD
    Closing date 23rd July, 2022
    9 days ago Full Time - Fixed Term
  • General Manager Decision Support Services

    Bureau of Meteorology

    • National
    Closing date 22nd July, 2022
    10 days ago Full Time - Ongoing
  • Multiple Directors - Engagement, Partnerships and Communications

    Department of Customer Service

    • NSW CBD, Regional
    Closing date 20th July, 2022
    1 month ago Full Time - Fixed Term
  • Director

    Museum of Australian Democracy at Old Parliament House

    • ACT
    Closing date 30th July, 2022
    2 days ago Full Time - Ongoing
  • Executive Director Corporate Services - Canberra, Melbourne or Sydney

    Australian Commission for Law Enforcement Integrity

    • VIC CBD
    Closing date 3rd July, 2022
    12 days ago Full Time - Ongoing
Search All Jobs

Login

Get Premium now. Not ready? Get the free Daily newsletter.

Forgot password?

Share via email

Access your 3 free Mandarin Premium articles

As part of your free trial you will receive 'The Juice', The Mandarin's daily free newsletter, the 'Premium wrap' every Saturday and marketing emails. You can opt out at any time.
Content
  • News
  • Research Series
  • Features
  • Portfolios
  • Jurisdictions
  • New Zealand
  • People & Capability
  • Thought Leadership
  • Editors’ Picks
  • Resource Library
  • Site Map
Products & Services
  • The Juice Newsletter
  • Partner & Advertising solutions
  • Mandarin Live
  • Public Sector Events Calendar
  • Partner Content
  • Premium
  • Careers
Legal
  • Privacy Policy
  • Terms of Usage
  • Code of Conduct
Connect
  • About Us
  • Contact Us
  • Support
  • Our Team
Social
Copyright © The Mandarin
Private Media logo CRIKEY SMARTCOMPANY
wpDiscuz