While the tone is flat in March, Australia needs to caution against talking itself into an economic downturn.
March 2019 presents a sombre tone around the Australian economy, with the recently announced December 2018 quarter national accounts disappointing at just 0.2 percent GDP growth.
The results reflect the marked slowdown in the economy in the second half of 2018 – just 2.3 percent growth year-on-year.
Add to this the March 2019 Westpac-Melbourne Institute Index of Consumer Sentiment which fell 4.8 percent, and there is general concern.
However, at KPMG, we believe we have to be careful of ‘talking ourselves into a downturn’, and remain optimistic that growth should start to lift through 2019.
Around the globe, there is both uncertainty and buoyancy. For example:
UK: Brexit remains a handbrake and an on-going distraction for the UK economy. Despite this, the UK has been experiencing record levels of employment, solid public finances and robust wages growth.
US: The US economy continues to enjoy its longest period of economic expansion since the end of WWII – though there are darkening clouds. Annualised economic growth in 2018Q4 fell to 2.6 percent, down from 3.4 percent (2018Q3), primarily due to softer residential construction expenditure and lower state and local government spending.
China: In China, ongoing disputes with the US are starting to impact sentiment and elements of the real economy. However, manufacturing output remained solid during 2018, and the bringing forward of exports and the subsequent devaluation of the Yuan insulated the Chinese economy to some degree.
Europe/Japan/India: Europe saw overall growth of less than 2percent in 2018, as did Japan, while India’s growth dipped slightly from 7.1percent to 6.6 percent.
Full details on the Australian and global outlook can be found in KPMG's Quarterly Economic Outlook.