Australia: Sound but not stellar economy – Westpac

After stumbling in 2016, the prospects for the Australian economy are looking much better this year in view of the analysts at Westpac.

Key Quotes

“National income will receive a healthy boost from a sharp rise in ironore prices (off the back of improved conditions in China), export volumes are expected to record further strong gains, and the drag from mining investment will continue to wane.”

“The jobs market is expected to improve this year, supporting a recovery in household spending growth. But the recovery in employment growth is expected to fade in 2018, as a downturn in housing investment (from current elevated levels) weighs on activity. Given the relatively sluggish outlook for the labour market, we expect the RBA to keep its policy rate on hold this year and next. Conditions in Australia’s labour market also have important implications for trans-Tasman migration flows. Without a sustained improvement in Australia’s labour market, we may well see further upside surprises to net migration here in New Zealand.”