Australia & New Zealand
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Structural slowdown in China a key threat to Australia

Australia’s exports to China are even more vulnerable to a slowdown in the property sector than they were before the trade spat as iron ore has gained in importance. We think that China’s steel demand will fall before long and even if it doesn’t, a shift to electric arc furnaces is a big threat to Australian miners.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Australia & New Zealand Economics Weekly

Omicron could add to inflationary pressure

If Omicron were able to evade existing vaccines, a renewed period of lockdowns would be required which would force the RBA to step up its bond purchases. Inflation would fall initially as crude oil prices would continue to weaken, but disruptions to transportation networks coupled with continued strength in goods demand would add to the upward pressure on goods prices. However, for now the activity data suggest that the economy is roaring to life after the recent lockdowns and we’re sticking to our above-consensus GDP forecast of 5% for next year.

3 December 2021

Australia & New Zealand Data Response

Australia International Trade (Oct. 2021)

While it’s early days, the October trade figures suggest that net trade will turn into a drag on GDP growth yet again as imports rebound after the end of lockdowns.

2 December 2021

Australia & New Zealand Data Response

Australia CoreLogic House Prices (Nov.)

Housing demand remains very strong, but rising interest rates and lending restrictions should result in a further slowdown in house price growth next year.

1 December 2021

More from Marcel Thieliant

Japan Economics Update

Why is inflation still so low in Japan?

The continued weakness in Japan’s inflation is partly due to the recent plunge in mobile phone tariffs and the long lags between global energy prices and household utility bills. Indeed, inflation is set to rise next year. But more muted cost pressures in manufacturing than in other advanced economies coupled with the reluctance of Japanese firms to raise output prices mean that inflation won’t surge as it has elsewhere.

12 October 2021

Australia & New Zealand Economics Weekly

RBA’s dovish stance set to be challenged

While the RBNZ this week hiked interest rates by 25bp and signalled that more is to come, the RBA remained dovish. That makes sense in light of the continued weakness in underlying inflation and wage growth, but we still think that soaring commodity prices will eventually prompt Australia’s union to demand higher wages amidst a tight labour market. The looming strike by the Transport Workers Union is a sign of things to come.

8 October 2021

Japan Economic Outlook

Conditions for strong recovery finally in place

With the Delta wave having ebbed and the majority of the population now fully vaccinated, we expect a strong rebound in domestic demand over the coming months. But the inflation concerns that hang over other major developed economies won’t materialise and the Bank of Japan will keep policy loose for the foreseeable future.

7 October 2021
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