The Bigger Picture – A Global and Australian Economic Perspective

Global: Although some of the risks hanging over global markets have abated, recent global economic growth and the outlook remains lack lustre. Global growth remains stuck around the 3¼% seen since mid-2012 as lower commodity prices, capital flow reversals and central banks focused on getting inflation back toward target take a toll on the pace of expansion in the big emerging market economies that have underpinned most global growth.

Australia: In Australia, Q3 GDP figures were consistent with our view that the recovery across the non-mining recovery is broadening, and recent business survey results suggest this momentum continued into Q4. Despite this, downgraded commodity price forecasts have prompted a lowering of our real GDP growth forecasts to 2.7% in 2016 and 3.0% in 2017 (previously 2.9% and 3.2% respectively). Our unemployment rate forecasts are only a fraction higher however – as the composition of growth tilts towards more labour-intensive sectors. The RBA wants to keep monetary policy ‘stable’, so is unlikely to ease further absent a global shock, a surprise deterioration in the non-mining economy or a sharp re-appreciation of the AUD.

For more details, please refer to the attached documents.

• Australia & the World on two pages –  December 2015 (PDF, 279KB)