POLL-Australia’s economy to capture global growth crown this year

Reuters




* reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/econ-polls?RIC=AUGDPQP
 poll data
    * Economy to grow 2.6 pct this year, 2.8 pct next
    * CPI inflation seen 2.1 pct in 2017, 2.2 pct in 2018

    By Wayne ColeSYDNEY, April 20 (Reuters) - Australia's economy is forecast
to slowly gather speed this year and next, according to a
Reuters poll of analysts, an outcome that would see the
resource-rich nation pip the Dutch for the longest expansion in
modern history.
    Analysts estimated Australia'sA$1.7 trillion ($1.28
trillion) of annual gross domestic product (GDP) would grow 2.6
percent this year and 2.8 percent next year, unchanged from
forecasts in the previous poll in January.
    That would be up from 2.4 percent in 2016 and extend the
country's current run of 101 quarters without a recession,
already just a whisker from the Netherlands' record of 103.
    The race had looked in doubt when the economy unexpectedly
contracted in the September quarter of last year, but activity
bounced back strongly as export earnings surged and consumers
and government spent more.
    Lofty prices for major commodity exports delivered a big
boost to national income and nominal growth. While iron ore
prices have swung lower recently on concerns about Chinese
demand, shipments of liquefied natural gas are expanding
massively as new projects come on stream.
    Growth will take a temporary knock from Cyclone Debbie,
which barrelled into northern Queensland late in March and
caused widespread flooding in the coal-heavy region, disrupting
rail haulage for several weeks.
    Analysts estimate the damage might take 0.3 percentage
points off GDP growth this year and add a little to inflation,
though rebuilding would offset some of that over time.
    Also helping will be a levelling off in mining investment
after several years of steep falls. Business investment alone
took around 1 percentage point from GDP in 2016, so if it merely
stabilises that would remove a major hurdle to growth.
    This was one reason the IMF this week raised its forecast
for Australian growth to 3.1 percent for 2017, from 2.7 percent.
    "Modest growth as far as the eye can see," was the prognosis
of Riki Polygenis, head of Australia economics at NAB, who saw
GDP rising 2.8 percent next year and 2.6 percent for 2019.
    One risk was the lacklustre performance of the labour market
which is keeping wage growth at record lows and sapping consumer
spending power.
    The danger is all the greater as household debt is at
all-time highs and red-hot housing markets in Sydney and
Melbourne are vulnerable to a major price correction.
    The heat in housing has made the Reserve Bank of Australia
(RBA) very reluctant to cut interest rates any further, though
neither is there much pressure to tighten given inflation is
still too low for comfort.
    Having spent the past two...

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