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Australian economic news
07-12-2016, 11:49 AM, (This post was last modified: 07-12-2016, 11:54 AM by BlueKelah.)
Post: #1
Australian economic news
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 Big Grin


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.
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18-01-2017, 09:16 AM,
Post: #2
RE: Australian economic news
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.
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.

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