RBA Sees Improved Economic Conditions

With no sign of a near-term recovery in non-mining business investment and with our major trading partners at below average growth, the Reserve Bank of Australia is pinning its hopes on stronger employment and consumer spending to maintain its forecast of moderate growth over the coming year. The central bank’s latest forecasts for the Australian economy, published in its quarterly statement on monetary policy on Friday, show the economy accelerating gently from a sub-par growth of 2.25 per cent this year to around 3 per cent in 2016.

The above average consumer spending growth expected in 2016 is expected to be assisted by solid employment growth powered by the expansion of the more labour intensive parts of the economy. “Growth appears to have picked up in the September quarter as resource exports and dwelling investment returned to growth following temporary weakness in the June quarter,” the RBA says.

Looking ahead the bank says housing investment will continue to grow, but at a moderating rate. Consumer spending would be financed in part by a further decline in household saving. “Consumption growth is forecast to increase notwithstanding the expectation that income growth will be modest over the forecast period.”

AFR

Stuart McPhee
Stuart McPhee
Australian private trader for nearly 20 years, author, trading coach, licensed adviser and regular speaker at major trading events all around the world. Graduate of RMC Duntroon and former Australian Army Officer.