Australian Economic Outlook – Monetary Policy Statement of November 9th
November 9, 2012 in Australia & New Zealand
Reserve Bank of Australia’s monetary policy statement of November 9th indicates slightly weaker outlook for the growth of Australian economy than what was indicated during the monetary policy statement of August 2012. The expected GDP growth during the Australian financial year of July 1st, 2012 to June 30th, 2013 is estimated to be slightly less than 2.75%. The outlook presented August statement had indicated the GDP growth to be close to 3%.
The estimated GDP growth is less than the average global GDP growth which is expected to be 3.25% during 2012 and 3.5% during 2013.
Australian Economic trend of various sectors:
Overall household consumption is Australia showed a strong growth during the first half of the year. This includes the sales of motor vehicles for personal use which grew in recent months.
Though there has been a continuous decline in the housing sector during the first half of the year but the prospects are there for the improvement. The prospects for the improvements are mainly due to the lower interest rates and are visible by the rise in the new residential housing projects approvals and also the rise in housing prices and auction approvals.
Though there was an improvement in the employment situation during the first half of 2012 but there has been a decline during the recent months. The employment in the construction industry witnessed a strong fall. The growth in the wages have been average but much below the stronger trend during 2005 to 2008.
Mining and Resources Sector:
The outlook for Mining sector which is one of the most important part of Australian economy is slightly bearish. There was a drastic decline in the prices of Australian Iron ore and coking coal exports during July and August because of Chinese demand. There has been some recovery in the Iron ore prices but the coking coal prices continue to decline.
There has been a rise in the investment in the mining sector and hence on one side the supply situation has improved but on the other side the slowing down of Chinese demand has caused the prices to decline. Further decline in the prices is expected.
The combination of the above may see slowing down in the mining sector.
Australian Inflation Trend:
The underlying inflation during the quarter of September is estimated to be close to 0.75% and the same over the year 2012 is estimated to be near 2.50%. These make the underlying inflation higher by 0.50% than what it was 3 months back.