The World on Two Pages – August 2015

Our forecasts for global growth to stay around the 3¼% yoy and locally, our GDP forecasts are marginally stronger than last month – 2.4% in 2014/15, 2.8% in 2015/16 and 3.2% in 2016/17.

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The Bigger Picture – A Global & Australian Economic Perspective

Global: Our forecasts for global growth to stay around the 3¼% yoy mark remain basically unchanged; a sub-trend outcome that falls well short of the IMF’s rosier predictions. The hard data provides no evidence that overall global growth has picked up and our leading indicators suggest further stagnation through to September. The bursting of the share market bubble will probably only worsen China’s trend slowdown.

Australia: The economic outlook remains mixed and patchy. Mining investment is declining sharply, public spending is limited and national income growth is weak amidst declining commodity prices. Meanwhile, monetary policy is highly stimulatory and the AUD is acting as a shock absorber, with tentative evidence of recovery in non-mining activity. Our GDP forecasts are marginally stronger than last month – 2.4% in 2014/15, 2.8% in 2015/16 and 3.2% in 2016/17 – with domestic demand weak and net exports making a large contribution. The unemployment rate is forecast to stay around 6¼% before easing slightly into 2016/17. Central forecast is for the RBA to hold rates steady, with the next move likely to be up, but not till late 2016.

For more details, please refer to the attached document.