Reserve Bank of Australia (RBA) has trimmed its near-term economic growth forecasts as per its latest quarterly statement on Monetary Policy. Particularly, a growth of 1.5 per cent to 2.5 per cent is expected to be seen in the year to June 2017. This came at the back of the unexpected 0.5 per cent slip in growth in the September quarter. There has been a decline in real GDP in the September quarter, which is a significantly weaker outcome than as anticipated. The key drivers impacting the scenario included disruptions to coal supply and bad weather affecting construction activity. There has also been an impact from subdued growth in household spending.
GDP Growth (Source: Reserve Bank of Australia)
RBA has, however, maintained its upbeat stance on the nation’s economic condition in the long term and believes that there will be an orderly return to the growth starting end of 2017. Economic growth and inflation are expected to move up and the Australian economy is expected to witness reasonable growth in the long-term. Consumer price growth, inflation, are expected to rise from the current 1.5 per cent by the end of 2018 while unemployment may maintain its steady state at around 5.8 per cent until 2018. Primarily, GDP growth is expected to pick up over 2017 to 2½–3½ per cent, supported by low interest rates. RBA on a side note did admit about the rising risk coming-in from more restrictive and protectionist trade and immigration policies being set under the new U.S. administration.
On the other hand, various economists and monetary funds have raised their concerns over RBA’s long-term projections, and warned of significant risks and uncertainties still impacting the economic growth and low unemployment. Trend going forward will unveil more about the growth scenario on a long-term basis.
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