Westpac have issued a note on their revised outlook for economic growth in Australia.
- 0.0% for Q1 (from 0.4% previous forecast)
- expect a rebound in Q2, 0.8% q/q (prior 0.5%)
- Q3, Q4 both unchanged at 0.6%
- 1.9% y/y for whole of 2020 (from WPAC's previous forecast of 2.1%)
In brief:
- Australian economy will be adversely impacted by the coronavirus
- full extent of the impact remains highly uncertain
- Key is the duration and intensity of disruptions, as well as confidence effects
- As a starting point, we assume that intense disruptions to travel between Australia and China will last in the order of 1½ months - with the risk of a more protracted interruption
- Trade in goods, inbound and outbound, will also be disrupted
- Consumer and business confidence will likely take a hit, in part because global growth will be adversely impacted. This will weigh on spending decisions.
On the RBA
- its current overly-optimistic expectations for growth and jobs are not being met
- Currently we have April pencilled in for the next cut, but recognise that the Governor may need more time to be convinced that further action will be required.
