ai_group_economic_update
1
TOP POLICY CHALLENGES FOR GOVERNMENT Tax and federation reform Skills and education Workplace relations Energy and climate International trade Innovation and infrastructure Inflation is benign, the dollar is lower and the housing sector is recovering. But the mining boom is all but over and local business investment remains weak. Unemployment is rising. We expect the Australian economy to stay in the slow lane in 2015. WHY? BUDGET DATES 2015 NSW Mid-June SOUTH AUSTRALIA June QUEENSLAND Early June WESTERN AUSTRALIA Early May VICTORIA 5 May FEDERAL BUDGET 12 May Non-dwelling construction is forecast to contract further by -10.0% (includes mining, infrastructure, commercial and industrial construction) -10.0% 2014-15f -2.0% 2013-14e 2013-14a 2.5% 2014-15f 2.5% 2015-16f 3.0% GDP GROWTH RATE FORECASTS EMPLOYMENT participation rate is declining as the population ages, and for cyclical reasons UNEMPLOYMENT rate is rising from 6.0% to 2013-14 to 2014-15f 2012-13 65.1% 2013-14 64.7% 2014-15f 64.5% TRENDS TO WATCH IN 2015 Positives for Australian business growth in 2015 include: THE LOWER VALUE OF THE AUSTRALIAN DOLLAR LOW INFLATION AND CONTAINED WAGE INFLATION LOW INTEREST RATES AUD/USD CURRENT Vs. 4 YEARS AGO JAN 2012 1.06 JAN 2013 1.04 JAN 2014 0.88 29 JAN 2015 0.79 TREND TREND TREND INFLATION (CPI) WAGES (WPI) 2.5% 2.6% 3.0% 2.5% 2013-14a 2014-15f 2013-14a 2014-15f RBA cash rate is currently 2.50% As of 4 pm AEDT GROWTH IN TOTAL NOMINAL CREDIT TO BUSINESSES NOV 2012 +2.6%pa NOV 2013 +1.8%pa NOV 2014 +4.6%pa 2013-14: +0.8%pa 2014-15f: +1.0%pa LOWER OIL AND ENERGY COSTS A RESURGENT HOUSING MARKET RELATIVELY STABLE EMPLOYMENT GROWTH RELATIVELY STRONG POPULATION GROWTH RELATIVELY LOW GROWTH IN DEBT AMONG BUSINESSES TREND TREND TREND TREND TREND ESTIMATED RESIDENT POPULATION, JANUARY 2015 Estimated resident population growth rates 2012-13 1.75%pa 2013-14 1.7%pa 2014-15f 1.7%pa WTI LIGHT CRUDE ($US/BBL) CURRENT Vs. 3 YEARS AGO JAN 2013 97.450 JAN 2014 97.530 JAN 2015 45.480 DWELLING INVESTMENT GROWTH 2013-14a 2014-15f 5.1% Sources: Australian Bureau of Statistics; Australian Treasury; and Reserve Bank of Australia. www.aigroup.com.au
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Transcript of ai_group_economic_update
TOP POLICY CHALLENGES FOR GOVERNMENT
Tax and federation
reform
Skills and education
Workplace relations
Energy and climate
International trade
Innovation and infrastructure
Inflation is benign, the dollar is lower and the housing sector is recovering. But the mining boom is all but over and local business investment remains weak. Unemployment is rising.
We expect the Australian economy to stay in the slow lane in 2015.
WHY?
BUDGET DATES 2015
NSW Mid-June
SOUTH AUSTRALIA June
QUEENSLAND Early June
WESTERN AUSTRALIA Early May
VICTORIA5 May
FEDERAL BUDGET 12 May
Non-dwelling construction is
forecast to contract further by
-10.0%(includes mining,
infrastructure, commercial and industrial construction) -10.0%
2014-15f
-2.0%2013-14e
2013-14a 2.5% 2014-15f 2.5% 2015-16f 3.0%GDP GROWTH RATE FORECASTS
EMPLOYMENT participation rate is declining as the population ages, and for cyclical reasons
UNEMPLOYMENT rate is rising from 6.0% to
2013-14 to 2014-15f
2012-13 65.1% 2013-14 64.7% 2014-15f 64.5%
TRENDS TO WATCH IN 2015 Positives for Australian business growth in 2015 include:
THE LOWER VALUE OF THE AUSTRALIAN DOLLAR
LOW INFLATION AND CONTAINED WAGE INFLATION
LOW INTEREST RATES
AUD/USD CURRENT Vs. 4 YEARS AGO
JAN
20121.06
JAN
20131.04
JAN
20140.88
29 JAN
20150.79
TREND
TREND
TREND
INFLATION (CPI) WAGES (WPI)
2.5%2.6%
3.0% 2.5%2013-14a 2014-15f
2013-14a
2014-15f
RBA cash rate is currently 2.50%
As of 4 pm AEDT
GROWTH IN TOTAL NOMINAL
CREDIT TO BUSINESSESNOV 2012
+2.6%pa NOV 2013
+1.8%pa NOV 2014
+4.6%pa
2013-14: +0.8%pa 2014-15f: +1.0%pa
LOWER OIL AND ENERGY COSTS
A RESURGENT HOUSING MARKET
RELATIVELY STABLE EMPLOYMENT GROWTH
RELATIVELY STRONG POPULATION GROWTH
RELATIVELY LOW GROWTH IN DEBT AMONG BUSINESSES
TREND
TREND
TREND
TREND
TREND
ESTIMATED RESIDENT POPULATION, JANUARY 2015
Estimated resident population growth rates 2012-13 1.75%pa 2013-14 1.7%pa 2014-15f 1.7%pa
WTI LIGHT CRUDE ($US/BBL) CURRENT Vs. 3 YEARS AGO
JAN 201397.450
JAN 201497.530
JAN 201545.480
DWELLING INVESTMENT
GROWTH
2013-14a 2014-15f5.1%
Sources: Australian Bureau of Statistics; Australian Treasury; and Reserve Bank of Australia.
www.aigroup.com.au
