Australia & New Zealand
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Australia - How will policymakers rein in soaring public debt?

Australia’s gross government debt/GDP ratio will hit the highest level since WWII by 2022/23. While the budget deficit will narrow again over the coming years as tax revenues rebound and stimulus measures expire, it will remain consistent with rising debt levels. However, the financial markets probably won’t be spooked and the RBA should help by keeping government bond yields low. As such, the government will get away with only modest austerity that won’t undermine the recovery.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Australia & New Zealand Economics Weekly

Border reopening won’t ease labour shortages much

Australia’s government isn’t keen on opening the immigration floodgates once the border reopens to migrants next year and we still expect the unemployment rate to fall to 4% by 2023. Nor do we expect migration to ease labour shortages in New Zealand much next year. Nonetheless, New Zealand’s labour market is already very tight and with the RBNZ set to keep tightening monetary policy, we expect unemployment to creep higher over the next couple of years.

26 November 2021

Australia & New Zealand Data Response

Australia - Retail Sales (Oct. 2021)

The 4.9% m/m jump in retail sales in October brought them very close to their May peak and supports our view that consumption will reverse nearly all of the plunge during the lockdown this quarter.

26 November 2021

Australia & New Zealand Data Response

Australia Private Capex Survey (Q3 21)

Private capital expenditure dropped during the recent lockdowns but firms’ forecasts point to a strong rebound over the coming quarters.

25 November 2021

More from Marcel Thieliant

Australia & New Zealand Economics Update

RBA may make QE more flexible

We now expect the RBA to refrain from announcing a target for the overall amount of bond purchases at the July meeting while keeping the weekly pace of purchases unchanged at $5bn. A more flexible approach to bond-buying would make it easier for the Bank to end QE by mid-2022 as we anticipate.

8 June 2021

Australia & New Zealand Economics Weekly

Solid Q1 GDP more than makes up for Q2 weakness

The strong rise in GDP in Q1 has prompted us to revise up our GDP forecasts for this year. And while the Victoria lockdown will weigh on consumption growth in Q2, sentiment is holding up so we expect consumption to rebound in Q3 once the lockdown is lifted. Finally, soaring demand for housing is driving record capacity constraints in the construction industry. With the border likely to remain closed until the middle of next year, construction firms will find it difficult to alleviate the labour shortages they are facing.

4 June 2021

Japan Economics Weekly

Industry to benefit from recovery in capital spending

The slump in retail sales in April suggests that consumer spending may have fallen further during the third state of emergency. However, the medical situation is improving and the vaccination rollout is accelerating. And Japan’s traditional growth engine, its large manufacturing sector, is roaring back to life as industrial output is now above pre-virus levels. While GDP growth this year will fall short of expectations, we think it will be stronger than most anticipate in 2022.

4 June 2021
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