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Quarterly Economic Outlook: Global and Australian Forecasts – June 2017
Quarterly Economic Outlook – June 2017
Led by growth in both emerging market and developing economies, global economic conditions have improved moderately in Q1 2017. Growth in advanced economies, however, remains below trend. Meanwhile, in Australia the Government is now forecasting the Budget will achieve a surplus by 2020-21.
Global Outlook
- Economic growth in Europe continues to be uneven across the member countries and aggregate economic growth of just 0.5 percent q/q was recorded in the Euro area (EA-19) in Q1 2017.
- A second GDP estimate for US revised economic growth up from 0.7 percent to 1.2 percent in Q1 2017 reinforcing the tightening stance the US central bank has been taking on interest rates. However, labour market figures in May came in ahead of expectations with unemployment now 4.3 percent – down 0.1 percent from the previous month.
- The major Asian economies of Japan and China grew by 0.3 percent q/q and 1.3 percent q/q, respectively.
- Commodity prices have also seen an uptick, although recent volatility has seen oil prices fall.
- Headline measures of inflation in most countries are heading up towards their respective ‘target range’ although core inflation remains low.
- Equity markets and bond yields have, in general, risen reflecting improved economic conditions and an easing of uncertainty.
Australian Outlook
- The Government is now forecasting the Budget will achieve a surplus by 2020-21.
- The unemployment rate fell 0.2 percentage points to 5.5 percent in May, although labour market conditions remain mixed (and diverge across the country).
- Inflation rate is slowing bouncing back to RBA target rate. Headline inflation picked up to 2.1 percent y/y in Q1 2017 with underlying inflation hovering around 1.9 percent y/y (trimmed mean basis).
- Consumer sentiment in Australia remains subdued, declining 1 point in May to 98, down from 99 in April.
