Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
In the upcoming fiscal update, the Australian Treasurer is going to have to admit that the cumulative budget deficit over the next four years is going to be some $30bn bigger than expected in May’s Budget. The elusive budget surplus is therefore drifting …
11th December 2015
November’s labour market data are either a major mirage or a minor miracle. We think that the truth lies somewhere in between, with conditions improving but not quite as much as the figures suggest. … Australia Labour Market …
10th December 2015
After cutting interest rates today from 2.75% back to the record low of 2.50% seen during the Global Financial Crisis, the Reserve Bank of New Zealand sent a strong signal that it doesn’t think rates need to fall further. We think it will be proved wrong, …
Despite the modest fall back in the Westpac measure of consumer confidence in December, from 101.7 in November to 100.8, we don’t expect this to be the beginning of a downward trend as the buoyant labour market and falling petrol prices should continue to …
9th December 2015
The Australian economy has continued to perform reasonably well given the very testing set of circumstances and has comfortably outperformed other commodity producers. But we don’t expect GDP growth to accelerate by much next year, if at all, as net …
4th December 2015
The acceleration in retail sales growth in October is very timely for retailers, who will be rubbing their hands at the idea that households are becoming more willing to open their wallets ahead of the crucial Christmas shopping season. … Australia …
The Reserve Bank of New Zealand will probably cut interest rates by 0.25%, from 2.75% to 2.50%, at the policy meeting on Thursday 10th December. What’s more, and despite the release of some positive economic news since the Board last met, we believe that …
3rd December 2015
The Australian economy isn’t as strong as the surge in GDP in the third quarter suggests, as a large boost to growth from net exports hides the worrying contraction in domestic demand. While GDP growth in 2015 as a whole will now be better than we had …
2nd December 2015
Even though the Reserve Bank of Australia has now left interest rates on hold at 2.0% for seven meetings and appears to be going cold on the idea of further cuts, we still think that a weakening in the outlook for both activity and inflation will prompt …
1st December 2015
The latest data on net exports and government spending/investment suggest that GDP growth in the third quarter was a little bit stronger than we thought at around 0.9% q/q. This supports the widespread view that the RBA will leave rates at 2.0% at the …
Even though the recent comment by the Reserve Bank of Australia Governor that everyone should “chill out” was clearly said in jest, it looks a little misplaced when we have since found out that capital expenditure is falling off a cliff. The absence of …
27th November 2015
The plunge in private capital expenditure in the third quarter suggests that GDP growthwas a little weaker than we had been expecting and, more worryingly, that non-mininginvestment is not filling the hole left behind by the end of the mining boom. … …
26th November 2015
Economic activity in both Australia and New Zealand appears to have been pretty robust in the third quarter, with the latest data pointing to gain in GDP of around 0.7% q/q and 1.0% q/q respectively. That would be much improved from the 0.2% and 0.4% …
The flow of positive economic news since the last Reserve Bank of Australia (RBA) meeting makes it a sure bet that the RBA will leave rates on hold at 2.0% for the seventh consecutive month when the Board meets on Tuesday 1 st December. The likelihood of …
24th November 2015
If the recent improvement in Australia’s labour market is sustained, then wage growth will soon accelerate from its current 17-year low. An increase in productivity growth at the same time would keep inflation low, thereby ensuring that real wages and …
20th November 2015
Although GDP growth probably rebounded in the third quarter, New Zealand’s economy isn’t in the clear just yet as the full impact of the collapse in the dairy price is still working its way through the system. This will prevent a sustained rebound until …
19th November 2015
The Reserve Bank of Australia will have been pleased to see more evidence that the housing market is cooling at the same time that the outlook for business investment is improving. If recent trends continue then it won’t be long before, for the first time …
13th November 2015
The strength of Australia’s labour market in October builds on other evidence that suggests the economy has made some big leaps forward in recent months. It diminishes the chances of further rate cuts, at least in the near-term. … Australia Labour Market …
12th November 2015
The further rise in consumer confidence in November, to a six-month high, suggests that households are playing a part in the recent “firming” in activity. … Consumer Confidence …
11th November 2015
By highlighting the recent “firming” in activity at the same time as emphasising that there is scope to cut interest rates further, the Reserve Bank of Australia has managed to support confidence without strengthening the dollar. A renewed weakening in …
6th November 2015
September's retail sales and international trade figures support the RBA's view that economic conditions have recently "firmed". They suggest that GDP growth may have rebounded from the dismal 0.2% q/q in the second quarter to a much more respectable 0.7% …
4th November 2015
The stark deterioration in labour market conditions in New Zealand in the third quarter pretty much guarantees that the RBNZ will cut rates to 2.5% at the meeting in December, from 2.75% now. What's more, it supports our view that rates will then fall all …
Although the Reserve Bank of Australia (RBA) once again decided to leave interest rates on hold at 2.0%, the new line in the statement that "the outlook for inflation may afford scope for further easing of policy" supports our view that interest rates …
3rd November 2015
The further fall in underlying inflation in Australia in the third quarter could be the start of a period of persistently low inflation that plays a role in prompting the Reserve Bank of Australia to cut interest rates to 1.5% next year. Inflation on the …
2nd November 2015
It is surprising how the recent economic narrative for Australia and New Zealand is similar to the relative performance of the Wallabies and the All Blacks on the rugby field. If this continues, then our forecast that GDP in 2017 will grow by 3.5% in New …
30th October 2015
Today's decision by the Reserve Bank of New Zealand (RBNZ) to leave interest rates at 2.75% is just a pause in a loosening cycle that we believe will end with rates falling to 2.00%. And the news that the RBNZ is not happy with the recent strengthening in …
29th October 2015
The tightening in monetary conditions triggered by the recent rises in mortgage rates by the major banks and the strengthening in the dollar is unlikely to prompt the Reserve Bank of Australia (RBA) to cut interest rates from 2.0% at the policy meeting on …
27th October 2015
Our forecast that underlying inflation in Australia will fall below the Reserve Bank’s 2-3% target range next year suggests that inflation will soon start to have a bigger influence on policy. Although there are a number of factors that could prompt the …
23rd October 2015
Although the Reserve Bank of New Zealand (RBNZ) will probably leave interest rates on hold at 2.75% at the policy meeting on Thursday 29 th October, this will just be a pause in the loosening cycle rather than the end. Our forecast that rates will fall to …
22nd October 2015
Australia is set to overtake Qatar as the world’s largest LNG supplier by 2018. However, recent trends in energy markets pose some headwinds for LNG exporters. In particular, the slump in oil prices has significantly reduced the price of Australia’s …
16th October 2015
The CPI data for the third quarter were not weak enough to make a rate cut at the RBNZ's policy meeting in late October a certainty. But with the full effects of the recent slowdown in economic growth yet to be felt, we think that persistently low …
While the fall in employment in September is unlikely to significantly alter the RBA's view of the economy, we think that a sustained weakening in the labour market will contribute to the RBA cutting interest rates from 2.0% now to 1.5% next year. … …
15th October 2015
The rebound we expect in China over the next few quarters should come as a relief to Australian policymakers and many investors. But long-run prospects for iron ore demand, which makes up more than half of Australia’s exports to China, remain gloomy. The …
9th October 2015
By leaving interest rates on hold at 2.0% for the fifth month in a row today, the Reserve Bank of Australia (RBA) demonstrated that the recent falls in equity prices have not increased its appetite for further rate cuts. We expect that a more general …
6th October 2015
While we remain concerned about the outlook for the Australian economy, we think it will continue to outperform other commodity producers such as Canada, Brazil and Norway. Australia’s labour market will probably remain stronger than those elsewhere, its …
2nd October 2015
Concerns over the health of China’s economy and the fall in domestic equity prices are unlikely to prompt the Reserve Bank of Australia (RBA) to cut interest rates from 2.0% at the meeting on Tuesday 6th October. That said, over the coming months we …
29th September 2015
While we remain more concerned than most about the Australian economy, the latest fall in equity prices won’t significantly restrain consumption growth. There is plenty of scope for households to absorb the hit to wealth by reducing their saving rate …
25th September 2015
Although we wouldn’t recommend placing too much weight on the quarterly rate of GDP growth in any one quarter, the respective 0.2% and 0.4% rises in Australia and New Zealand in the second quarter mark a clear slowdown fromthe rates of the previous two …
24th September 2015
A faster rise in interest rates in the US than widely expected next year will provide a welcome boost to the economies of Australia and New Zealand by leading to a further depreciation of their currencies. This will especially be the case if, as we …
18th September 2015
The disappointingly soft rebound in GDP in the second quarter supports our below consensus forecasts that the economy will grow by just 2.0% this year and that the RBNZ will cut interest rates from 2.75% now to just 2.0% by early next year. … New …
17th September 2015
Even though we expect both the Australian and New Zealand dollars to weaken further, to around US$0.60 and US$0.55 respectively, this won't be enough to prevent GDP growth in both economies from slowing to 2.0% this year and staying there next year too. …
16th September 2015
While the risks to our forecast that the central banks of Australia and New Zealand will eventually reduce interest rates to new record lows of 1.5% and 2.0% respectively (from 2.0% and 2.75% now) are clearly on the upside, those risks are not yet big …
10th September 2015
Another healthy gain in employment in August, as well as a slight fall in the unemployment rate, continued the strong run of Australia’s labour market. The slowdown in GDP growth this year may still feed through into weaker employment growth, but for now …
The most important part of today’s policy announcement by the Reserve Bank of New Zealand is not the third consecutive 0.25% cut in interest rates, to 2.75%, but the Bank’s growing acceptance that a marked economic slowdown is underway. Even so, we still …
Our view that the annual rate of GDP growth in Australia will slow further in the second half of the year suggests that the Australian dollar may yet weaken from its current six-and-a-half-year low of US$0.70 to US$0.65, if not to US$0.60. This would …
4th September 2015
The Reserve Bank of New Zealand (RBNZ) is all but guaranteed to cut interest rates by 0.25% for the third meeting in a row, from 3.00% to 2.75%, on Thursday 10th September. We wouldn’t completely rule out a 0.50% reduction. Either way, we suspect that …
3rd September 2015
Australia's economy slowed sharply in the second quarter, increasing the chances that growth will fall short of the Reserve Bank of Australia's forecasts for this year and next. Given this, rate cuts could soon come back onto the agenda. … Australia GDP …
2nd September 2015
While the Reserve Bank of Australia’s (RBA) decision to leave interest rates on hold at 2.0% for the fourth meeting in row suggests that the chances of further rate cuts have faded further, we still wouldn’t rule out rates being reduced again, perhaps …
1st September 2015
While it is hard to describe any of the recent news on investment in Australia as “good”, the latest figures were not as bad as we had feared. In particular, the plunge in commodity prices does not appear to be spilling over into much weaker investment …
28th August 2015
The continued resilience of the labour market in Australia is the main reason why the Reserve Bank of Australia (RBA) has become less inclined to cut interest rates again. Jobs growth remained strong in July and, notwithstanding what looks like a …
27th August 2015
