Australia MYEFO: Real GDP growth to rise as the drag from mining investment diminishes

Australia Mid-Year Economic and Fiscal Outlook (MYEFO) released today says the real GDP is seen rising as the drag from the mining investment diminishes.

Key points

Real GDP is forecast to grow by 2½ percent in 2017-18 and 3 percent in 2018-19, compared to 2.0 percent achieved in 2016-17 and Budget forecasts of 2¾ percent and 3 percent for 2017-18 and 2018-19 respectively.
Nominal GDP is forecast to grow by 3½ percent in 2017-18 and 4 percent in 2018-19.
The 2017-18 forecast is lower compared with Budget, largely reflecting recent subdued outcomes for wage growth and domestic prices.
Commodity prices remain a key uncertainty to the outlook for the terms of trade and nominal GDP.
Household consumption is forecast to grow by 2¼ percent in 2017-18 and 2¾ percent in 2018-19.
Growth in consumption is expected to pick up over the forecast period in response to strengthening labour market conditions.
Business investment is expected to grow at a stronger pace than forecast at Budget. It is forecast to grow by 2 percent in 2017-18 and 3 percent in 2018-19.
Growth in non-mining business investment was stronger than expected in 2016-17 and is forecast to remain solid at 5 percent in both 2017-18 and 2018-19.
Exports are forecast to grow by 3 percent in 2017-18 and 4 percent in 2018-19.
Imports are forecast to grow by 3 percent in 2017-18 and 2½ percent in 2018-19.
Consumer prices are forecast to increase by 2 percent through the year to the June quarter 2018, before accelerating to 2¼ per cent through the year to the June quarter 2019.
Budget deficit seen at AUD 23.6 billion.

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