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AUD: No fireworks, Australia to witness moderate economic growth in 2015/16 - NAB

FXStreet (Delhi) – Research Team at NAB, remain cautiously optimistic that the Australian economy will experience moderate economic growth through 2015/16 before picking towards its historical average growth rate in 2016/17 as they kept their GDP forecasts unchanged at 2.4% for 2015/16 and 3.1% for 2016/17 while they expect the unemployment rate to ease to 6% through 2015/16 and to 5¾ in 2016/17.

Key Quotes

“As well canvassed, the economy is challenged by the transition away from mining investment towards non-mining sources of economic growth. This is occurring at a time in which our largest trading partner is experiencing a slowdown in industrial output, while commodity prices have fallen sharply.”

“That said, recent policy easing from the RBA in early 2015 is continuing to be supporting economic activity, and typically does so with a 12-18 month lag. Meanwhile, the further 24c depreciation of the AUD/USD from 92c in Sep-14 to 68c on our forecasts by mid-16 will support trade exposed industries; while some of this is offsetting the decline in the terms of trade, it is beneficial for industries not as directly exposed to lower commodity prices.”

“High frequency data continues to support our view that the non-mining recovery is becoming more well entrenched. Business conditions in the NAB survey holding at an above average level for 7 consecutive months, and key leading indicators such as capacity utilisation are also trending upwards. Services industries are particularly strong, including but not limited to tourism.”

“Consumer spending will remain below-trend, constrained by low wages growth, with forecasts dependent on a decline in the household savings rate.”

Click here for a recent article on AUD/USD titled “AUD/USD: Reasons why bullish rally may not be over.”

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