Australia: Strong first half and continuing near term momentum - NAB

Analysts at NAB have not changed their macroeconomic forecasts for Australian economy, but have slightly lowered their near term AUD forecasts.

Key Quotes

“From a higher base (reflecting revisions to history) we see the following factors as key drivers to the outlook. Public sector demand – both infrastructure spending and consumption through the NDIS – will remain strong, and will probably flow over into quite strong non-mining investment.”

“Mining is a potential upside factor to the forecasts, with that sector now clearly reporting the strongest conditions and confidence.”

“The housing cycle will now probably detract a touch more from growth but not more than the usual cyclical swings and roundabouts.”

“Again our main concern remains with consumer spending.”

“The net outcome of the above sees little change to our previously published quarterly growth profile, with GDP growth of  around 3¼% in 2018, slowing to 2.7% in 2019 and 2.5% in 2020. That growth profile should see the labour market tighten – we maintain an unemployment forecast of 5% by mid-2019 with risk that this could be achieved sooner.”