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Quarterly Economic Outlook: Global and Australian Forecasts – September 2017

Quarterly Economic Outlook – September 2017

In Q2, 2017, global economic conditions remained relatively steady, while the outlook for the global economy has improved. In Australia, we saw economic growth of 0.8 percent on the last quarter (seasonally-adjusted), and 2 percent year on year.

Brendan Rynne

Partner, Chief Economist

KPMG Australia


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Global outlook

  • Global economic conditions have remained relatively steady over the course of the past quarter while the outlook for the global economy has improved.
  • Europe, Japan and the U.S. have seen improved economic activity over the second quarter of 2017. Growth in China has also edged higher over the same period. The British economy which is still saddled with the uncertainty surrounding the outcome of the Brexit talks.
  • Natural disasters and geopolitical events have also generated short-term headwinds. Early estimates of the direct costs of Hurricane Harvey (in Southwest Texas) on U.S. economic activity has ranged from USD$30-200 billion.
  • Price inflation remains subdued and below central banks’ targets in the advanced economies.
  • Monetary policy remains accommodative although policy tightening has commenced in some advanced economies and gradual tapering has been signalled in the major advanced economies.
  • "Quantitative Tightening" has replaced "Quantitative Easing" as the new buzzword amongst economists and analysts.
  • On the balance of risks, KPMG Economics maintains its forecast of global growth for 2017 with real GDP at 3.0 percent, lifting to 3.4 percent in 2018.

Australian outlook

  • The Australian economy grew by 0.8 percent q/q (seasonally-adjusted) in the June quarter of 2017 and 2.0 percent y/y (or 1.8 percent on a rolling 4-quarter basis).
  • Growth was relatively broad-based with domestic final demand and net exports contributing strongly.
  • Labour market conditions remained steady with the unemployment rate at 5.6 percent (seasonally-adjusted) in August 2017.
  • Headline inflation rose 1.9 percent y/y in Q2 2017 (0.2 percent q/q) with underlying inflation at around 1.8 percent y/y (trimmed mean basis).
  • The RBA’s official cash rate (OCR) is accommodative at 1.5 percent.
  • KPMG Economics’ forecasts for the Australian economy have not substantially changed since the last Quarterly Economic Outlook with real GDP growth expected to grow at around 2.9 percent for 2017-18.

Economic Outlook

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