The Bigger Picture: A Global and Australian Economic Perspective

• Global: Despite the ups and downs of global financial markets in the first five months of the year, the underlying picture remains one of steady sub-trend growth and sub-target inflation. Neither the business surveys nor the monthly partial data on industrial output and exports show evidence of an imminent acceleration in global growth but the rise in commodity markets off their recent lows and the wealth effects of higher share prices could support activity later this year. Despite the many risks, we still think global growth will muddle through 2016 at around the 3% rate seen last year but there are plenty of economic vulnerabilities that could spark further rounds of market volatility.

• Australia: Real GDP growth picked up to 3.1% y/y in Q1 and is expected to remain at around the 3% mark for the remainder of 2016 and 2017 before easing back to 2½% in 2018. While net exports are providing the largest contribution to growth in real terms, our estimates suggest non-mining activity is outperforming the aggregate economy. The unemployment rate is forecast to fall to around 5½% by late 2016 before ticking up to around 5¾% in 2018. Meanwhile, the weaker terms of trade and low wages growth will continue to challenge national income and government revenue. Low inflation will remain a feature, but we are not persuaded at this stage that further monetary policy easing will be forthcoming.

For more details, please refer to the attached document.

• World on two pages:  June 2016(PDF, 234kb)

More from NAB:

• Global and Australian forecasts – June 2016
• US Economic Update  – June 2016
• NAB Products – International and Foreign Exchange