The Bigger Picture – A Global and Australian Economic Perspective

Global: The global economic upturn is still under way, but there are a few signs that the pace of expansion is no longer accelerating. Inflation remains subdued and financial markets calm, meaning there is little need for aggressive central bank moves on policy. Market volatility and economic policy uncertainty are both fading as the probability of severe “tail risk” events are markedly lower. However, there still are uncertainties – North Korea, Spanish politics, US economic policy, Italian elections etc.

Australia: The forecast outlook is essentially unchanged, following revisions to our expectations for the labour market and the RBA cash rate last month. We are pencilling in two 25bp rate hikes from mid-2018, with employment now expected to be strong enough to give the RBA enough confidence in its forecasts for an eventual lift in wages growth and inflation by that point. That said, we remain more cautious about the economic outlook than the central bank, mindful of the potential hurdles to growth such as impending peaks in dwelling construction and LNG exports, and a struggling household sector amidst low wages growth, higher energy prices and elevated underemployment and household debt.

For more details, please refer to the attached document

• NAB’s World on two pages: October 2017 (PDF, 198kb)