Global & Australian Forecasts – September 2014

Disappointing global growth continued into mid-2014 with stagnation in the Euro-zone sparking deflationary concern and ECB action while Japanese demand is still struggling to recover from April’s tax rise.

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  • Disappointing global growth continued into mid-2014 with stagnation in the Euro-zone sparking deflationary concern and ECB action while Japanese demand is still struggling to recover from April’s tax rise. Solid economic upturns in the US, UK and Canada limiting the slowing in advanced economy growth while the anticipated softening in the emerging market economies is under way, pointing to another year of below-trend 3% growth. We still expect growth to accelerate to around trend through 2015 and 2016.
  • Domestic GDP growth sub-par (0.5%) in Q2―with nominal GDP falling. Business conditions & confidence still positive but conditions give back most of August gains. Domestic forecasts revised marginally: 2014/15 2.9% (was 3.1%); 2015/16 3.4% (was 3.2%). Unemployment rate still to peak at 6½% by end-2014. Inflation at the bottom of the RBA target band. Cash rate still on hold until late 2015.

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