The Bigger Picture – A Global and Australian Economic Perspective – April 2018

• Global: Overall, the global economic picture remains the most encouraging it has for several years – supported by synchronised growth among the big advanced economies and broadly stable growth across the big emerging markets. Above trend global growth looks set to continue through 2018 but this year should be the peak of this economic cycle and growth should slow to below-trend levels by 2020 but our base case is for a soft landing for the global economy. The obvious risk to this outlook comes from trade tensions between China and the US, which could erode business confidence, disrupt supply networks and distract political and business leaders from pursuing the reforms needed to boost future growth potential.

• Australia: After a somewhat disappointing 2017 we continue to expect growth to gain more momentum during 2018 – with GDP increasing by around 3% through the year or 2.8% in year average terms. This reflects increased government infrastructure spending, some continued improvement in non-mining business investment and the impact of increasing LNG exports, despite seeing little pick up in the speed of consumption growth this year. With indicators pointing to continuing strong jobs growth unemployment is expected to fall to around 5% by the end of 2018, which should place some upwards pressure on wages. This environment – together with above trend global growth – is consistent with the RBA gradually withdrawing emergency low monetary policy settings from late 2018. However nothing will happen until wages growth accelerates and the RBA will be very cautious and data driven.

For further details, please see the attached document:

• NAB’s World on two pages: April 2018 (PDF, 78kb)