Australia: Economy likely to grow at 2.9% in 2018 - NAB

Analysts at NAB expect growth of 2.9% in 2018 and 2019 for Australian economy before slowing to 2.6% in 2020.

Key Quotes

“In the near-term, growth will be driven by increasing LNG exports, strong growth in public sector investment and a pickup in private business investment growth which will continue the handover from the mining sector. Against this, we expect mining investment to continue to fall – though at a declining rate.”

“We expect dwelling investment to also weigh on growth, and the outlook for the consumer to remain weak. While our forecasts remain unchanged, we believe a number of new risks have emerged. On the upside – as evident in the NAB Monthly Business Survey – conditions remain favourable in the mining sector and it appears there may be some new investment. Against this the outlook for the consumer remains highly uncertain.”

“A slowing in employment growth recently may result in a slower pickup in wage growth and ultimately consumer confidence. Also forward orders have come off significantly in recent months.”

“We continue to expect the first rate increase by the RBA to occur around mid-2019 though this remains highly data dependent. Overall the risks are building that the RBA may be on hold for longer.”