Goldman Sachs head of macro-research economist here in Australia, Tim Toohey on population growth and the implications for the Reserve Bank of Australia

  • Compared to government projections of 1.80% population growth has slowed to 1.35% yoy in 1Q15
  • Is well on track to meet our forecast of 1.2%yoy by the end of 2015
  • In April we downgraded our estimate of Australia's 'potential' economic growth rate to 2.5%pa and estimated Australia would move into an oversupply of housing by the end of 2017 based on emerging evidence of slower population growth
  • Although the RBA has recently suggested slower population growth warrants a lower estimate of 'potential' economic growth we also believe that they will also become increasing uncomfortable with the nearer term growth implications of rapidly slowing population growth

There's more detail at MacroBusiness, here

This could be another reason for the RBA lowering its outlook for growth and is another factor arguing for a rate cut (not that there are positives for the Australia economy also).

--

ps. Toohey is expecting an RBA rate cut in November ... that's been his call for a while.

Yesterday we got ANZ saying they expect the RBA to cut rates twice in 2016

Earlier views from AMP Capital's Head of Investment Strategy and Chief Economist, Dr Shane Oliver