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Economics

BIS Shrapnel compiles detailed research and forecasts for the Australian economy. Over the last 50 years BIS Shrapnel has earned an outstanding reputation for picking the major shifts and turning points in the economy.

Economic Outlook

Report Published: December 2016

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Contact: Joy Xenita

+61 2 8458 4220

Trump presidency and some implications for Australia

The commentariat couldn’t stop talking about Trump through the election campaign. And now they can’t stop speculating about what he’ll do. Let’s see what he does when the reality and responsibility of presidency lock in. And, even with Republican control, what US politics and bureaucracy will let him do. Hence, it’s too early to tell what a Trump presidency will do. But he will try to stimulate growth.

Markets are anticipating infrastructure spending and tax cuts leading to stronger growth and emerging inflation. Some mooted Trump policies will affect Australia, but we expect the impact to be minor.

However, Australia has its own problems which are largely related to weak domestic demand. We’re working through the ‘transition’ to a post-mining boom economy and this takes time. This is not a steady state economy. The bulk of structural change has yet to come. Extraordinarily, some commentators, including journalists and economists who should know better, seem to think that the transition has already happened. That’s ridiculous. We’re still only half way through the fall in mining investment. And don’t underestimate the magnitude of the transition.

After the enormous structural change during the decade-long mining boom, we are just beginning another major structural change to rebuild our non-mining industries.

The lower dollar is working to improve competitiveness and stimulate the dollar-exposed industries. That’s already evident in tourism and overseas student education. Meanwhile, cyclical swings will run their course. The residential boom is running out of steam. We’re about to lose the rest of the motor vehicle industry. We are starting a phase of rising infrastructure spending. Business is still locked into post-GFC austerity. And the awaited recovery in non-mining business investment is still years off.

That means lower employment growth. Through the year employment growth peaked at just under 3% last November and has already fallen to 0.9% this year to October. We think it will average 1% over the next three years, with the unemployment rate drifting up from the current 5.6% to 6%.

The labour market is weaker than the unemployment rate suggests. Hence the weakness of wages growth. That translates to weak household disposable income and retail sales. The days of booming consumption are long gone. Households are maintaining consumption by spending more of what they earn, slowly loosening the purse strings from the precautionary saving post-GFC.

It’s not all bad. Already we can see the first signs of structural change in the strength of tourism (both inbound and domestic) and international student education services. But there’s a long way to go, both in the dollar-exposed industries and in broadening growth to non-mining industries, before business investment comes through as a driver to strengthen growth.

Transition will be long and difficult, with marked differences in performance between industries and regions. Success will be determined by our ability to rebuild non-mining industries.

We expect GDP growth to soften to average around 2.5% over the next three years.

Topics in this month’s Bulletin:

  • Trump presidency and what it means for Australia
  • Retail trade analysis
  • Education services exports
  • Outlook for employment by industry sector

Forthcoming topics

  • Analysis of September quarter national accounts and revised forecasts
  • Construction and investment outlook
  • The competitiveness of the manufacturing industry – are higher gas and electricity prices offsetting the benefits from a lower dollar?
  • An update on the international economy
  • Forecasts of exports and imports by category

BIS Shrapnel's Economic Outlook service monitors developments in the Australian economy and prospects for businesses looking 18 months ahead.

BIS Shrapnel's Economic Outlook service has been running for over 40 years and is Australia's premium source of independent economic analysis and commentary. The service includes:

  • Monthly Bulletin 
    Discusses the impact of major developments in the Australian economy on prospects for business sectors. We provide regular data, forecasts and discussion of:
    • growth in major sectors 
    • production and investment 
    • consumer demand 
    • price and wage inflation 
    • interest rates and exchange rates 
    • margins and profits by sector
  • Economic Briefing Conferences 
    Two complimentary admissions to BIS Shrapnel's half-day conferences, held twice a year, in March and September. These detailed briefings, held in most capital cities, cover Australia's economic prospects, identify key issues and actions required, and provide a comprehensive set of forecasts for the next 18 to 24 months. 
  • Subscriber Enquiry Service 
    Subscribers to Economic Outlook can also speak directly to our team of economists about specific forecasting issues affecting your business. 
  • Online Service 
    The online version of this service also gives subscribers instant access to bulletins, conference slides, latest statistics, financial data, forecasts, charts and additional press releases in a convenient electronic format (PDF, MS Excel and MS PowerPoint) through our website, www.bis.com.au.  

 

MONTHLY BULLETINS

Adobe PDF document files for download by subscribers.

EO BULLETIN NOVEMBER 2016 (pdf, 663 KB)

EO BULLETIN OCTOBER 2016 (pdf, 684 KB)

EO BULLETIN SEPT 2016 (pdf, 758 KB)

EO CHARTBOOK SEPT 2016 (pdf, 1.80 MB)

EO BULLETIN AUGUST 2016 (pdf, 1.53 MB)

EO BULLETIN JUNE-JULY 2016 (pdf, 1.11 MB)

EO BULLETIN MAY 2016 (pdf, 834 KB)

EO BULLETIN APRIL 2016 (pdf, 776 KB)

EO BULLETIN MARCH 2016 (pdf, 727 KB)

EO CHARTBOOK MARCH 2016 (pdf, 1.70 MB)

EO BULLETIN FEBRUARY 2016 (pdf, 1.16 MB)

EO BULLETIN DECEMBER 2015/JANUARY 2016 (pdf, 756 KB)

WEEKLY DATA

Microsoft Excel spreadsheets and PDF files for download by online subscribers.

EXCHANGE RATES – WEEKLY (xls, 2.29 MB)

INTEREST RATES – WEEKLY (xls, 2.06 MB)

STOCK PRICES – WEEKLY (xls, 5.74 MB)

COMMODITY PRICES – WEEKLY (xls, 1.75 MB)

CALENDAR OF RELEASES AND EVENTS (pdf, 19 KB)

LATEST DATA AND FORECASTS

Microsoft Excel spreadsheets and PDF documents for download by online subscribers.

STATE INDICATORS UPDATED 28.11.2016 (xls, 1.05 MB)

COSTS & PRICES UPDATED 28.11.2016 (xls, 614 KB)

EXTERNAL SECTOR UPDATED 28.11.2016 (xls, 1.14 MB)

FINANCIAL INDICATORS UPDATED 28.11.2016 (xls, 1.83 MB)

BUSINESS INDICATORS UPDATED 28.11.2016 (xls, 874 KB)

ECONOMIC INDICATORS UPDATED 28.11.2016 (xls, 1.67 MB)

RECENT ARTICLES

PDF document files for download by online subscribers.

NOV 2016 – TRUMP PRESIDENCY AND WHAT IT MEANS FOR AUSTRALIA (pdf, 53 KB)

NOV 2016 – RETAIL TRADE ANALYSIS (pdf, 78 KB)

NOV 2016 – EDUCATION SERVICES EXPORTS (pdf, 40 KB)

NOV 2016 – OUTLOOK FOR EMPLOYMENT BY INDUSTRY SECTOR (pdf, 172 KB)

OCT 2016 – STATE OF PLAY (pdf, 52 KB)

OCT 2016 – INFLATION RISES BUT REMAINS LOW. IS DEFLATION A RISK? (pdf, 33 KB)

OCT 2016 – COMMODITY PRICES ARE RECOVERING – SUSTAINABLE RALLY OR A FALSE DAWN? (pdf, 71 KB)

OCT 2016 – OUTLOOK FOR STATES (pdf, 201 KB)

SEPT 2016 – ECONOMIC OVERVIEW – PRIVATE DEMAND IS STILL SUFFERING FROM POST GFC WEAKNESS. (pdf, 124 KB)

SEPT 2016 – DETAILED GDP, INCOME, EXPENDITURE AND INVESTMENT FORECASTS (pdf, 118 KB)

SEPT 2016 – PROFITS AND INDUSTRY ANALYSIS; CONSTRUCTION AND INVESTMENT OUTLOOK (pdf, 272 KB)

SEPT 2016 – STATE OF PLAY (pdf, 131 KB)

SEPT 2016 – GROWING PART-TIME EMPLOYMENT MEANS CHANGES TO PRODUCTIVITY MEASURE.PDF (pdf, 190 KB)

AUG 2016 – STATE OF PLAY (pdf, 450 KB)

AUG 2016 – WITH PRICE AND WAGE INFLATION LOW, WILL THE RBA CUT RATES AGAIN? (pdf, 436 KB)

AUG 2016 – AN UPDATE ON THE INTERNATIONAL ECONOMY (pdf, 813 KB)

AUG 2016 – IMPACTS OF THE CAR MANUFACTURING SHUTDOWN (pdf, 572 KB)

JUNE/JULY 2016 – GDP GROWTH OF 3 PER CENT UNSUSTAINABLE BEYOND THE NEAR TERM (pdf, 107 KB)

JUNE/JULY 2016 – CONSTRUCTION AND INVESTMENT OUTLOOK (pdf, 284 KB)

JUNE/JULY 2016 – NON MINING BUSINESS INVESTMENT ON A SLOW ROAD TO RECOVERY (pdf, 118 KB)

JUNE/JULY 2016 – FALLOUT FROM THE UK’S DECISION TO LEAVE THE EUROPEAN UNION (pdf, 336 KB)

MAY 2016 – STATE OF PLAY (pdf, 51 KB)

MAY 2016 – INTEREST RATE AND EXCHANGE RATE OUTLOOK (pdf, 134 KB)

MAY 2016 – INFLATION OUTLOOK (pdf, 112 KB)

MAY 2016 – BUDGET WRAP (pdf, 215 KB)

APRIL 2016 – STATE OF PLAY (pdf, 51 KB)

APRIL 2016 – TOURISM CONTRIBUTION TO GDP AND EMPLOYMENT (pdf, 142 KB)

APRIL 2016 – OUTLOOK FOR STATES (pdf, 246 KB)

MARCH 2016 – ECONOMIC OVERVIEW (pdf, 128 KB)

MARCH 2016 – STATE OF PLAY (pdf, 70 KB)

MARCH 2016 – CONSTRUCTION AND INVESTMENT OUTLOOK (pdf, 67 KB)

MARCH 2016 – OUTLOOK FOR INDUSTRY OUTPUT, PROFITS AND EMPLOYMENT (pdf, 79 KB)

FEB 2016 – WHY AUSTRALIA WON’T SLIP INTO A RECESSION? (pdf, 40 KB)

FEB 2016 – INTERNATIONAL ECONOMY – CURRENT STATE OF PLAY AND OUTLOOK (pdf, 69 KB)

FEB 2016 – COMMODITY PRICES SLUMP AMID THE TURMOIL – BUT SLOW AND MIXED RECOVERY EXPECTED (pdf, 71 KB)

FEB 2016 – HOUSEHOLD SPENDING UNDERPINNING GROWTH – RETAIL SALES, MOTOR VEHICLES AND EMPLOYMENT (pdf, 171 KB)

FEB 2016 – PROSPECTS FOR INFLATION (pdf, 43 KB)

DEC 2015/ JAN 2016 – UNBALANCED GROWTH AWAITS NON-MINING INVESTMENT RECOVERY (pdf, 91 KB)

DEC 2015/ JAN 2016 – ANALYSIS OF NATIONAL INCOME, PROFITS AND OUTPUT BY INDUSTRY SECTOR (pdf, 93 KB)

DEC 2015/ JAN 2016 – CONSTRUCTION AND INVESTMENT OUTLOOK (pdf, 89 KB)

DEC 2015/ JAN 2016 – RESIDENTIAL BUILDING CYCLE NEARING ITS PEAK? (pdf, 115 KB)

DEC 2015/ JAN 2016 – RECENT TRENDS IN PUBLIC SECTOR INVESTMENT BY ASSET TYPE (pdf, 37 KB)

CONFERENCE CENTRE

Microsoft Powerpoint, Excel and Adobe PDF document files for download by online subscribers.

EO BULLETIN SEPT 2016 (pdf, 758 KB)

EO CHARTBOOK SEPT 2016 (pdf, 1.80 MB)

EO CONFERENCE SLIDES SEPT 2016 – PART 1 (ppt, 1.02 MB)

EO CONFERENCE SLIDES SEPT 2016 – PART 2 (ppt, 862 KB)

EO CONFERENCE SLIDES SEPT 2016 – ENGINEERING CONSTRUCTION OUTLOOK (ppt, 1.81 MB)