Australia: Real GDP to grow by 2.5% in 2018 - Westpac

Analysts at Westpac expect Australia’s real GDP to grow by 2.5% in the year to December 2018, a below trend performance.

Key Quotes

“The looming home building downturn is expected to directly subtract 0.4ppts from growth in 2018, after a broadly neutral impact in 2017. The drag from housing will be compounded by negative spill-over effects on employment and household spending. In addition, the international backdrop is expected to be less supportive, with world growth moderating, led by China, and with commodity prices retracing from current highs.”

“Under these circumstances we do not support current market pricing which points to the beginning of the rate hike cycle in mid-2018 with a full rate hike priced in by end 2018. We continue to expect rates to remain on hold in 2018.”

“The High Court is soon set to provide its decision on whether some Federal MPs comply with the constitutional requirement to be a citizen of the Commonwealth and no other. While the government has been functioning in the wake of this distraction, the potential for the decision to invalidate a number of current MPs, including the current Deputy PM, would create political chaos for the Government. So those risks will come further into focus as we near the decision and they are certainly not AUD positive.”