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Australia- How inflationary is the border closure?

We believe that the slump in net migration is holding back supply more than demand. Unless the government allows net migration to overshoot its pre-virus level for a prolonged period once the border reopens next year, we think that staff shortages will prove more inflationary than the RBA anticipates.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Australia & New Zealand Economics Weekly

Housing downturn to weigh on activity

The housing downturn is now in full swing. While that hasn’t prevented a solid rise in consumption in Q2, we think falling wealth will be a drag on consumer spending next year. What’s more, our forecast that house prices will eventually fall 15% from their April peak would be consistent with dwelling investment falling sharply in the coming years. The upshot is that the housing downturn will bring the Australian economy close to recession next year.

1 July 2022

Australia & New Zealand Data Response

Australia CoreLogic House Prices (Jun.)

The monthly decline in house prices in June was the largest since 2019 but is unlikely to be the sharpest decline in the current downturn. We think house prices will eventually fall by 15% from their April peak, which will weigh heavily on GDP growth next year.

1 July 2022

Australia & New Zealand Data Response

Australia Retail Sales (May 2022)

The strong rise in retail sales in May highlights the strength in the Australian economy and is consistent with our view that the RBA will continue to hike rates aggressively in the months ahead.

29 June 2022

More from Marcel Thieliant

Japan Data Response

Japan Flash PMIs (Jul. 2021)

Today’s flash PMI suggests that the services sector was hit by Tokyo’s state of emergency but we still expect activity to recover towards the end of this quarter.

26 July 2021

Australia & New Zealand Economics Weekly

RBA to push back taper

With New South Wales today declaring a “national emergency” in response to the worsening outbreak of the highly contagious Delta variant, we now expect the Reserve Bank of Australia to play its part by keeping bond purchases at $5bn per week until November.

23 July 2021

Australia & New Zealand Economics Update

Australia - Vaccine rollout has yet to alter health situation

With Sydney tightening its lockdown and the one in Victoria set to be extended, we now expect GDP to shrink by 0.5% q/q in Q3. The vaccine rollout isn’t advanced enough yet to ease the medical situation meaningfully, but it is set to keep accelerating and render lockdowns obsolete by the end of the year.

19 July 2021
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