The Deloitte Access Economics Business Outlook
Insights from Australia’s most accurate economic forecaster[i]
Business Outlook takes an in-depth look at the macroeconomic and business environment across 22 industry sectors and each of Australia’s states and territories – from facts, figures and forecasts on Australian and world growth prospects, to interest and exchange rates, wages and prices, exports and imports, jobs and unemployment, taxes, and public sector spending.
The excerpt from the latest Business Outlook report, published 23 July, provides a snippet of what you can expect from the publication – and in the inimitable voice of Deloitte Access Economics’ Chris Richardson…
Mini credit crunch bites property prospects
The globe is galloping, but 2017 saw the UK drop off the pack, and 2018 is seeing growth ease in Europe, Japan and Korea. Yet overall global growth is lifting as the US and much of Asia strut their stuff. Then again, this global cycle is already elderly, and a jump in energy prices is taking a growth toll in Japan, Korea and Europe.
Even more importantly, the cost of credit has been edging up in both the US and in China, the first time that monetary policy has tightened in both nations at the same time in over a decade. That trend is already pressuring liquidity in Chinese markets.
And interest rates will likely rise even more in the years ahead. That will be much more painful than it used to be, as the world carries much more debt than it did before the GFC. But, China caveats aside, those are mostly issues for late 2019 and beyond: although global growth is now flying on fewer engines, it is still flying. That provides a strong backdrop to prospects for Australia.
Australia sells into those parts of the world that are still doing well, and the pace of our growth has lifted. Yet rising global interest rates are combining with a bout of bank caution on lending (via extreme vetting of loan applications in the wake of Royal Commission revelations) to generate a mini-credit crunch.
That’s putting further pressure on house prices, whose falls are gathering pace (though those falls remain contained enough that they don’t pose larger problems for the overall outlook). More challenging, that mini-credit crunch is occurring at the same time energy costs jump. But business confidence is generating a capex recovery and consumers, despite falling wealth, will be getting support from a nascent recovery in wages and from personal tax cuts.
On balance, that leaves the outlook for Oz where it’s been for some time: good without being great.
For more information on Business Outlook, or to purchase your copy please visit Solutions by Deloitte.
[i] Deloitte Access Economics was named Australia’s ‘Most Accurate Forecaster’ by global survey house Consensus Economics in its 2017 Forecast Accuracy Awards.