The Australian and New Zealand economies both appear to be running out of steam with growth slowing sharply in the second half of 2018. And we think the outlook is set to deteriorate further. Annual GDP growth in Australia may plunge as low as 1.5% in 2019 from 2.8% in 2018. In New Zealand, annual GDP growth could slow to around 2.2%, down from 2.8% in 2018. The weak outlook sets the stage for policy easing in both countries. We expect the RBA to cut rates by 75 basis points to 0.75% by early 2020 and the RBNZ to cut rates by 50 basis points to 1.25% by the end of this year.
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