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Australia Country Risk Report Q4 2018

Australia Country Risk Report Q4 2018

Real GDP growth is highly likely to slow over the coming years owing to a number of factors: (1) slowing growth in the working age population; (2) a high share of government spending relative to GDP; (3) still subdued terms of trade; and (4) the growing risk of deflation. These impediments will result in real GDP growth averaging 2.2% over the next decade, down from an average of 3.1% over the long-term.

Federal elections have to be held in Australia by November 2019, and we expect that they will increasingly dominate the political landscape over the coming quarters. The upcoming elections will likely be a close battle between the incumbent Liberal-National coalition and the opposition Australian Labor Party. A change to a Labor minority government could disrupt policy continuity, hurting the business environment.

We are still cautious on the Australian dollar's trajectory over the coming months as unfavourable real interest rate differentials relative to the US, coupled with negative dynamics in the domestic housing market and commodity demand, are likely to weigh on the currency.


Executive Summary
Core Views
Major Forecast Changes
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Revising Up 2018 Growth Forecasts, But Consumption And Housing Headwinds To Linger
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
External Trade And Investment Outlook
Australia's Export Outlook To Deteriorate Further
Outlook On External Position
TABLE: MAIN EXPORT AND IMPORT PARTNERS
TABLE: MAIN EXPORTS AND IMPORTS
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
Monetary Policy
Steady Australian Cash Rate Amid Economic Uncertainty And Below-Target Inflation
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Australia Country Risk Q4 2018ContentsCurrency Forecast
Australian Dollar To Remain Under Pressure
TABLE: CURRENCY FORECAST
10-Year Forecast
The Australian Economy To 2027
Four Major Headwinds To Growth
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Federal Elections To Increasingly Dominate Australia's Political Landscape
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Three Key Challenges: Population, Climate Change, China
Global Macro Outlook
Fewer Negative Surprises, But Trade Risks Rising
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: AUSTRALIA – MACROECONOMIC DATA & FORECASTS

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