Australia Freight Transport Report Q1 2016
BMI View: Over the course of 2016 we expect to see road freight once more outperform the other twomodes in Australia with the former coming in at 3.10% y-o-y growth, and rail freight and air freight areforecast to grow by 2.77% and 0.70% respectively. The slight y-o-y gains across all of the modes comparedto 2015 are in line with our view that the overall trade picture is set to improve over the next 12 monthswith real trade growth pencilled in to increase by 3.00% in 2016. Through to the end of our forecast periodin 2019, we expect growth to be steady, if uninspiring. We expect the Australian dollar to continue to facefundamental downside pressure, and this will allow the decline in imports needed to improve the country'sexternal indebtedness over the coming years.
The Australian economy continued to slow in Q1 2015, and we maintain our 2015 real GDP growthestimate of 2.3% (versus 2.7% in 2014). The country's worsening terms of trade and unwinding investmentboom continue to act as major headwinds to growth going into 2016, thus tempering the rate of growth ofthe freight modes in Australia over the short term. That said, the lack of an explicit easing bias by theReserve Bank of Australia (RBA) and potential risks to the property market caused by low interest ratessuggest to us that further cuts by the central bank are unlikely, and we expect the RBA to keep its cash ratesteady at 2.00% over the course of 2015 and 2016.
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