Country Economic Forecasts - Australia

Country Economic Forecasts - Australia

The recent run of data has surprised to the upside, suggesting that the Australian economy ended 2021 on a stronger footing than we had anticipated. Moreover, Covid cases peaked in mid-January, meaning the impact from the Omicron wave will be milder than was assumed a month ago. Earlier and faster inflation poses a slight risk to growth, but the RBA have signalled they will wait for faster wage growth to be entrenched before tightening policy. Based on stronger labour market data, we have upgraded our estimate for Q4 2021 growth and now expect the economy expanded by 4.3% in 2021. The outlook for 2022 has also brightened, and we have upgraded our GDP growth forecast to 3.8%.