Quarterly Economic Outlook – November 2016 | KPMG | AU

Quarterly Economic Outlook: Global and Australian Forecasts – November 2016

Quarterly Economic Outlook – November 2016

The Australian economy continued to experience moderate real growth during the second quarter of 2016, whilst the performance of the world economy remains lack lustre, with geopolitical factors dominating considerations around future world economic growth.

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Global outlook

  • Geopolitical factors are currently dominating considerations around future world economic growth. The performance of the world economy remains lacklustre, with growth anticipated to be only 3.0 percent for 2016, stepping up to 3.3 percent and 3.7 percent for 2017 and 2018 respectively.
  • The Euro area continues to achieve uneven and muted economic growth, resulting in stagnant labour market outcomes and below-target inflation.
  • The post-Brexit UK economy has been dominated by a substantial depreciation of the Sterling.
  • Preliminary estimates shows the US economy surprised on the upside in terms of real GDP growth in the September quarter 2016, expanding on an annualised basis by 2.9 percent.
  • By the middle of 2016 the Japanese economy was barely registering positive real GDP growth.
  • While achieving strong GDP growth in the September quarter 2016 (annualised 6.7 percent), it is anticipated that the Chinese economy’s increasing dependence on credit will eventually result in a ‘disruptive adjustment’.
  • World trade as a proportion of world GDP started to decline during 2016.

Australian economy

  • The Australian economy continued to experience moderate real growth during the second quarter of 2016, increasing 0.5 percent over the March Quarter 2016, and 2.9 percent on a rolling 12-month basis.
  • Real GDP per capita grew at nearly 1.6 percent for the year, the strongest result since 2012, and only marginally slower than the average growth rate from 1980 (1.76 percent).
  • Imports surged by nearly 3 percent during the June quarter 2016, double the growth experienced in the export sector (1.3 percent q/q).
  • Government consumption spending increased by nearly 2 percent q/q, and 4 percent over FY15 results.
  • Growth In household expenditure was more subdued, increasing by just 0.4 percent q/q and 3.0 percent y/y respectively.
  • Investment activity across all sectors added nothing to growth for the June quarter 2016.

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