Long Term Forecasts 2016 – 2031
Report Published: July 2016
NEW PRELIMINARY KEY INDICATOR FORECASTS NOW PUBLISHED!
Full Report to be published in late July 2016.
The recent strengthening of growth is a false dawn. It’ll take time for non-mining sectors to emerge from the ashes of the mining boom and take over as drivers of growth.
The mining boom and associated rise in the dollar drove a decade-long structural shift towards mining and mining investment at the expense of the competitiveness of dollar-exposed industries. The GFC put paid to the rest. With few exceptions, notably those driven by the recent housing boom, non-mining sectors still haven’t recovered from the GFC.
Now we face a long, slow and difficult ‘transition’ back to the balanced growth we had before the mining boom.
The lower dollar will drive recovery in the trade-exposed industries, gradually broadening to recovery in non-mining sectors.
But we’re still only half way through the fall in mining investment. That shock is largely being offset by strong growth in mining production and exports. Hence the recent strengthening of GDP as LNG projects came on stream.
Take out mining production and the picture is much weaker.
- Domestic demand is weak.
- Household and business incomes are weak.
Non-mining GDP growth is being sustained by consumption expenditure as households spend more of what they earn.
- The residential building boom is running out of steam and will make a negative contribution next year.
- The bright spot is infrastructure spending where, after four years of decline, and despite continued budget constraints, we are beginning phase of growth.
- Business investment remains weak.
Financial conditions are stimulatory. Inflation is low and, despite recent concerns, there is little risk of deflation. Interest rates are low. And, while the dollar is perhaps not as low as we would like for competitiveness, it’s low enough to stimulate industry.
With weak demand and profits, businesses remain focused on cost and cash flow. Business is improving, but only gradually.
It could have been a lot worse. Other resource exporting countries experienced recessions. That won’t happen here. Though there will be winners and losers by industry and region. That has already begun. And there’s more to come.
But it’ll take time for non-mining sectors to emerge from the ashes of the mining boom and take over as the drivers of growth.
A subscription to Long Term Forecasts 2016 – 2031 report includes:
- The main Long Term Forecasts 2016 – 2031 report
- Update Report in February 2017, providing new commentary and forecasts
- Access to our team of economists through to April 2017 to discuss implications of forecasts, methodologies etc.
- Individual chapters contain detailed coverage of specific areas along with a summary table of key drivers and directions:
- Outlook for the global economy, the Australian dollar and Australia’s external trade
- Population and the labour market
- Household income and consumer demand
- Government spending Investment – public, business and private
- Wages growth, price inflation and interest rates
Industry prospects, including the sub-components of the Manufacturing industry
The Long Term Forecasts 2016 – 2031 online service provides supplementary information in electronic format, including access to our website to download chapters in PDF format, and charts and tables in MS Excel from both the main report and February 2017 Update. The online service provides quarterly updates of forecasts of key variables – available after the release of the June and December quarter National Accounts releases. Online access may be shared with up to four other staff members for greater utilisation of the service.
PRELIMINARY KEY INDICATOR FORECASTS – JUNE 2016
Excel document files for download by subscribers.
PRELIMINARY KEY ECONOMIC INDICATORS (UPDATED 27/06/2016) (xls, 109 KB)