Global

Global inflation slowed in September, including a softening in advanced economy inflation to its lowest level since September 2021. This has raised hopes that most major central banks are at the end of their tightening cycle, although upside risk remains. There was a large divergence in growth across the major AEs in Q3, with GDP growing strongly in the US but declining in the Euro-zone, UK and Japan. However, business surveys suggest growth differentials will narrow, while for emerging markets, the EM composite PMI dropping to its weakest reading since December 2022. We continue to expect global growth of 3.0% in 2023, before slowing to 2.6% in 2024, with a modest recovery to 3.0% in 2025 – this outlook remains below the long-term average of 3.4%.

Australia

For Australia, we have revised up our forecasts for growth and inflation (in the near-term) while lowering our expected peak in the unemployment rate to 4.5% (from 4.9%). Alongside this, we now see a cash rate peak of 4.6% in February, with the RBA staying on hold until late 2024. That said, our broad outlook remains unchanged with below trend GDP growth (1.4% and 1.7% over 2023 and 2024, respectively) and an ongoing easing in the labour market as slower growth in labour demand is unable to fully absorb still strong population growth. The moderation in inflation is expected to continue, but be bumpy, with the underlying rate ending 2024 at 4.5% before easing to 3.3% by end 2024.

Find out more in World on two pages (November 2023)