Global

Improved inflation trends have boosted hopes of monetary policy easing in 2024, with advanced economy prices in October rising at their slowest pace since July 2021. There was a wide divergence in growth among major advanced economies in Q3 – with strength in the US in contrast to relative weakness in other countries – however this gap is expected to narrow as the US slows in Q4. Among emerging markets, India and Russia grew faster than anticipated, however there is scepticism regarding the strength of both results. We have revised our forecasts for global growth marginally higher this month, largely reflecting the stronger reported growth in India. In 2023, the global economy is expected to expand by 3.1% (previously 3.0%), before slowing to 2.7% in 2024 (previously 2.6%). We continue to expect a modest recovery to 3.0% in 2025, however this outlook remains below the long term average of 3.4%.

Australia

For Australia, recent data on GDP, CPI and the labour market have confirmed that the economy is growing at a well-below trend pace, inflation pressure is continuing to moderate and the labour market has remained healthy. Our forecasts remain broadly unchanged, seeing below trend GDP growth of 1.4% and 1.7% over 2023 and 2024, respectively with soft consumption growth the key dynamic. While employment growth has been strong, some of the pressure in the labour market has begun to ease and we expect further easing as the economy slows. The moderation in inflation is expected to continue with trimmed-mean CPI ending 2024 around 4.5% before easing to 3.3% by end 2024. For now we continue to pencil in one further RBA rate rise for February but the data flow will be important, particularly the Q4 CPI due in January which may come in slightly below the RBA’s forecast.

Find out more in NAB’s World on two pages (December 2023)