Australia: Economic growth to slow a little over the next two years - NAB

Analysts at Australia suggest that following the strong growth of early 2018, they expect Australian economic growth to slow a little over the next two years.

Key Quotes

“We think the strength in the economy will still be enough to see the labour market hold onto recent gains, and for the unemployment rate to decline further from the 5.0% reached in September/October – a 6-year low.”

“Recent data have largely confirmed that spare capacity is falling and that wage growth is beginning to moderately lift. As has been the case for some time, we expect the inflationary impacts of this erosion in spare capacity to emerge only gradually. Indeed, the Q3 CPI confirms we are starting from a below target position at around 1¾% on the core measures.”

“With these trends heading in the right direction, we have left our call on the first move in interest rates unchanged but remain firmly of the view that this is highly data dependent.”

“Even with robust growth, the labour market tightening and evidence of a modest pickup in wage growth, the RBA will want to see firm evidence of higher wages growth feeding through to inflation before adjusting rates.”