December 19, 2023

The Forward View – Australia: December 2023

Slow growth to persist in Q4 and into 2024

Our podcast series continues with the NAB Forward View – Australia, giving you a 10 minute summary of our key forecasts this month.  To listen, just click the link below.

If listening on a mobile device, click listen in browser.


  • After incorporating the data for GDP, CPI and the labour market over the past month our forecasts are largely unchanged. At a high level, these data 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.
  • Households continue to face into the pressures from higher rates and inflation, adjusting both the amount of spending and the savings rate. Dwelling investment growth also remains weak (though not as bad as feared) while business investment will likely remain mixed as the impact of policy support wanes, but capacity utilisation remains high and a large infrastructure and private sector pipeline of buildings & structures work leads to some spill overs on equipment spending.
  • Overall, we still expect GDP to grow by 1.4% y/y over 2023 (0.2% in Q4) and 1.7% over 2024. Soft consumption growth will be the key dynamic while both dwelling and business investment on net make little contribution.
  • Our outlook for the labour market is unchanged with the unemployment rate expected to rise to around 4.5% by end 2024. Some of the pressure has begun to ease in the labour market with job vacancies/ads continuing to fall with population growth remaining strong and participation still high.
  • We see trimmed-mean inflation ending 2023 around 4.5%, easing to 3.25% by end 2024 and tracking within the upper half of the RBA’s target band by end- 2025. We consider the risks as balanced around this profile with our Business survey still pointing to elevated price pressures but an increasingly notable slowing in activity should place downward pressure on prices.
  • Based on the outlook for weak activity growth, an ongoing easing in labour market pressures (with wage growth topping out around 4%) and continued easing in inflation we still believe the cash rate is at, or near, its peak for this cycle. We continue to pencil in a hike in February for a cash rate peak of 4.6%. However, in the near term the data (particularly for inflation) will be important. Equally, the RBA will be increasingly concerned about the pressure on the consumer and how that will affect future growth and employment.

For further details, please see The Forward View Australia (December 2023)