The annual revisions to GDP, and a weak 0.3%qoq in Q3 , mean that the GDP boom of H1’18 has been revised away. The chart below shows what we thought was true (the red line) v. the new information (black line). The bottom line is that the economy wasn’t so bad in 2016, and hasn’t been so good in 2018. We’re stuck at or around trend.
The RBA wasn’t really planning to do much anyways, but it should have some impact on their forecasts. GDP had been expected to be 3.5%y/y in Q3 … so we are looking at a 75bps downgrade when they next make their forecasts in Feb 2019.
The government cannot take a trick. Their proud boast of GDP just revised away.
Our de-regulated labour market means wages aint going anywhere as well.
A cash rate of 1.5% is not compatible with strong GDP growth.
In accrrual accounting terms the budget is looking much better.
Nominal gdp and tax receipts look okay. But for sure this will lead them to tighten where they can in the current year. A downturn that causes a deficit in 2019/20 would be political death.
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