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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.

Long Term Forecasts 2016 – 2031

Report Published: August 2016

Price:

Contact: Joy Xenita

+61 2 8458 4220

2016 REPORT NOW AVAILABLE! 

We’ve had a good run. And it’s not over yet.

Certainly, Australian growth will stay soft for the rest of this decade as we absorb the shock of falling mining investment, as the residential cycle turns down and until non-mining growth and business investment recover. But that’s a good outcome. There is minimal risk of recession. And other resources exporting countries have gone into recession.

Meanwhile, the world economy is staying weaker for longer, still recovering from the GFC. The newspapers are full of doom and gloom as Europe struggles out of rolling recessions in the face of concerns about viability of their banks, as Britain slowly exits the EU, and with concerns about the sustainability of growth in China. Only the US is doing well. It was always going to take a decade to absorb the excess capacity created during the pre-GFC boom until investment came through to boost growth. We think the US will end up driving world recovery. But it will take time.

Australia’s main issues are domestic. With the end of the mining boom, we face a protracted and difficult structural change involving rebuilding of dollar-exposed industries and recovery in non-mining growth and investment. That will take time.

Accordingly, the next three years will be a long and difficult transition towards balanced growth with the next stage involving:

  • Another three years of falling mining construction taking the total decline to 74% below the peak.
  • Working through the structural shift from a mining investment-driven economy back to the balanced growth we had before the mining boom. However, rebuilding non-mining growth and investment will be agonisingly slow.
  • Falling residential building, a key driver of growth over the last three years,
    Recovery in infrastructure spending by governments,
  • Major regional and industry shifts,
  • Recovery in finance and business services as non-mining growth and investment gradually build momentum.

Soft growth means that:

  • Employment growth will be weak and the unemployment rate will rise.
  • Inflation in prices and wages won’t be a problem this decade.
  • Interest rates should remain low but could go even lower if the dollar appreciates again, or if the economy weakens. We have a large buffer and don’t have to follow increases in US cash rates. Bond rates, however are a different story. While bond rates look like staying lower for longer, in the medium term we expect them to rise significantly, starting in the United States with Australia following.

Overall, GDP growth is expected to be below trend, averaging 2.5 per cent per annum for the rest of this decade. The next three years will be challenging times much like the last two years, with major differences across states, regions, towns and capital cities.

The clever country has a challenging time ahead. We need to prepare for what will be a very different economy in five years’ time.

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

Online Access:
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.

 

JUNE 2016 NATIONAL ACCOUNTS QUARTERLY UPDATE – SEPTEMBER 2016

Excel document files for download by subscribers.

LTF – JUNE 2016 NATIONAL ACCOUNTS QTRLY UPDATE (28.09.2016) (xls, 97 KB)

REPORT – AUGUST 2016

Adobe PDF document files for download by subscribers.

FULL REPORT: LONG TERM FORECASTS 2016 – 2031 (pdf, 2.53 MB)

EXECUTIVE SUMMARY (pdf, 241 KB)

OVERVIEW (pdf, 408 KB)

INTRODUCTION (pdf, 229 KB)

CHAPTER 1 – THE WORLD ECONOMY, EXCHANGE RATES AND TRADE (pdf, 422 KB)

CHAPTER 2 – THE LABOUR MARKET AND POPULATION TRENDS (pdf, 370 KB)

CHAPTER 3 – CONSUMER DEMAND FORECASTS (pdf, 388 KB)

CHAPTER 4 – GOVERNMENT SPENDING AND FISCAL POLICY (pdf, 430 KB)

CHAPTER 5 – INVESTMENT FORECASTS (pdf, 746 KB)

CHAPTER 6 – PRICES, WAGES AND INTEREST RATES (pdf, 372 KB)

CHAPTER 7 – INDUSTRY PROSPECTS (pdf, 435 KB)

CHAPTER 8 – OUTLOOK FOR THE MAJOR MANUFACTURING INDUSTRY SECTORS (pdf, 511 KB)

TABLES – AUGUST 2016

Excel document files for download by subscribers.

TABLES: LTF 2016 REPORT (xls, 1.59 MB)

CHARTS – AUGUST 2016

PowerPoint document files for download by subscribers.

CHARTS: LTF 2016 REPORT (ppt, 2.68 MB)