Australian economic news

[BlueKelah]

Looks like recession coming for Aus sooner than Singapore. Lol... 
Those investing in Australia exposed stocks, early warning.

Massive budget deficits, rate rise to hit property/construction, unwinding of carry trade, rising populism against Chinese foreign investment, mining downturn, OnG downturn. Perhaps Superman Li will rethink his offer for his Aussie target now

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Australia’s Economy Shrinks Most in Eight Years; Currency Slumps

• GDP falls 0.5% in third quarter, more than economist estimates
  
  
• Australian dollar falls almost half U.S. cent on result
  

Australia’s economy contracted the most in almost eight years last quarter as construction and government spending slumped. The currency plunged almost half a U.S. cent.

• Gross domestic product fell 0.5% from the previous quarter, when it gained a revised 0.6%
  
  
• Result was the worst since the depths of the global financial crisis at the end of 2008 and well below economists’ estimates of a 0.1% drop
  
  
• The economy grew 1.8% from a year earlier, compared with a forecast 2.2% gain
  

The report spans a period when Australia’s election returned Prime Minister Malcolm Turnbull with a razor-thin parliamentary majority and government spending and resource exports failed to lift growth. The slowdown in annual growth from 3.1 percent in the second quarter is dramatic, particularly when the Treasury estimates the economy’s potential at 2.75 percent and central bank forecasts match or exceed that level.

[Boon]

HSBC: Australia's economic rebalancing act is nearly complete
David Scutt
17 Jan 2017

Australia has been undergoing a once in a multi-generation economic transition since the beginning of the decade, with household spending, residential construction and the nation’s services sector tasked with helping to offset the negative economic effects of the unwinding mining infrastructure boom.

While it hasn’t been all smooth sailing over this period — a surprise 0.5% GDP contraction recorded in the September quarter last year is just one case in point — somewhat remarkably, the Australian economy has done alright, defying those who believed the collapse in mining infrastructure investment would lead to a certain recession.

Thanks to a swathe of rate cuts from the RBA since — which have had both negative and positive side effects depending on who you ask — the Australian dollar has done what it’s always done as a shock absorber for the economy, weakening enough to support the non-mining areas of the economy.

Well, mark this point in the economic history books. According to Paul Bloxham, chief Australia and New Zealand economist at HSBC, Australia’s economic rebalancing act is now almost complete, with a familiar friend set to support the economy yet again at a time when it is needed most.

Australia’s mineral wealth.

“The story is now changing,” said Bloxham in a note released on Tuesday.

“The rebalancing act is almost done and a tailwind has, finally, arrived. Commodity prices have picked up, which is set to lift export values, nominal income growth, corporate profits, tax revenues, wages growth and inflation.”

Bloxham’s optimistic view is centred around the outlook for Australia’s commodity exports, replacing the mining infrastructure investment splurge that previously drove economic growth in recent years.

[Image: Australia-commodity-shift-for-growth.jpg]


“For nominal GDP, the major support is set to come from the combination of a continued ramp up in resource export volume and the recent rise in commodity prices,” he says. 

“Taking current future market pricing for iron ore, coal and oil prices, it suggests a substantial boost to growth in export values over the coming quarters.”

Bloxham is forecasting that export volumes will grow by 8.9% this year, and a further and 9.1% in 2018, helping to support both real and nominal GDP as a consequence.

Given that the economic drag from falling mining investment looks set to dissipate by mid-2017 as major LNG projects move from the construction to production phase, Bloxham is optimistic on the outlook for the Australian economy with growth in commodity exports and ongoing strength in services likely to override an expected slowdown in residential construction.

“The levelling out in mining investment is set to coincide with the end of a residential apartment building boom,” he says.

“Real growth is also expected to continue to be supported by the services sectors, led by exports of tourism, education and business services.”

Along with an expected boost in infrastructure investment — largely from the public sector — Bloxham sees economic growth accelerating from 2.6% in 2016 to 3.2% in 2018, placing upward pressure on wages, inflation and interest rates.

Although underlying inflation is below the RBA’s 2-3% target band, we expect it to gradually climb in 2017. There is a strong positive correlation between commodity prices and local wages growth. As a result, we expect the RBA to keep its cash rate on hold at 1.50% through 2017 and we have hikes pencilled in for 2018.

http://www.businessinsider.com.au/hsbc-a...ete-2017-1
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[cyclone]

Turnbull Warns of Tougher Economic Times for Australians

Australian Prime Minister Malcolm Turnbull is warning that tougher economic times loom for the nation, even as voters signal their discontent with his government.

“We have had a good run over the last 25 years of continued economic growth,” Turnbull will say in a speech in Canberra Wednesday, according to excerpts e-mailed from his office. “But the truth is that there are many parts of Australia where times are not so good, where jobs are scarce and prospects look less promising than they were.”

Just seven months after leading his Liberal-National coalition government to a razor-thin election victory, Turnbull’s bid to gain political momentum is being hampered by mounting signs of fiscal weakness. Third-quarter gross domestic product fell 0.5 percent in the first decline in more than five years, jobless figures are on the rise and a budget deficit that’s threatening the nation’s AAA rating is proving hard to budge.

More details in https://www.bloomberg.com/news/articles/...rity-wanes

[BlueKelah]

Sounds like technical recession coming.. he must have some numbers to be coming out with this bearish talk..

coupled with Chinese unable to bring money in and defaulting on OTP apartments(yes ongoing in sydney /melb/Brisbane now.) Things not looking so rosy despite recent commodity rebound..

Sent from my MotoG3 using Tapatalk

[ksir]

Sounds like technical recession coming.. he must have some numbers to be coming out with this bearish talk..

coupled with Chinese unable to bring money in and defaulting on OTP apartments(yes ongoing in sydney /melb/Brisbane now.) Things not looking so rosy despite recent commodity rebound..

Sent from my MotoG3 using Tapatalk

Maybe this time you'd be finally right.
The clock is always right at least twice a day.
Sorry for 2 liners, can't help to counter-balance.

[tonylim]

Sounds like technical recession coming.. he must have some numbers to be coming out with this bearish talk..

coupled with Chinese unable to bring money in and defaulting on OTP apartments(yes ongoing in sydney /melb/Brisbane now.) Things not looking so rosy despite recent commodity rebound..

Sent from my MotoG3 using Tapatalk

Maybe this time you'd be finally right.
The clock is always right at least twice a day.
Sorry for 2 liners, can't help to counter-balance.

Should get it right this time after so many similar posts .

[cyclone]

Cracks Are Appearing in Australia’s Trillion-Dollar Debt Pile

The Reserve Bank of Australia frequently seeks feedback on the health of the economy. It might want to call the debt counselors soon.

Homeowners, consumers and property investors around Australia are making more calls to financial helplines as three warning signs back up the spike in demand: mortgage arrears are creeping up, lenders’ bad debt provisions have increased and personal insolvencies are near an all-time high.

“Its steadily out of control -- I don’t know of too many financial counseling services where demand doesn’t exceed supply,” said Fiona Guthrie, chief executive officer of Financial Counselling Australia, who says the biggest increase in calls is from people suffering mortgage stress. “There are more people who have got mortgages that they can’t afford to pay.”

More details in https://www.bloomberg.com/news/articles/...-debt-pile