Australia & New Zealand
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Australia - Pandemic unlikely to result in long-term scarring

The closure of the border will reduce Australia’s potential output by around 2.5%. But this will be partly offset by higher productivity growth due to increased usage of technology and more employees working from home. And the usual red flags that have signalled a permanent loss of output ahead of previous downturns are mostly absent. The upshot is that a prolonged period of austerity may not be needed after all and the Reserve Bank of Australia should be able to tighten monetary policy before long.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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Australia & New Zealand Economics Weekly

Lockdowns and bond yields ease

The end of the lockdown in Victoria is an upside risk to our forecast that consumption will be unchanged in Australia in Q2. Meanwhile, S&P upgraded Australia’s credit rating outlook but that has little implication for Australian bond yields. We expect yields to rise to 2% by the end of the year as the RBA starts to taper its weekly bond purchases in November.

11 June 2021

Australia & New Zealand Economics Weekly

Lockdowns and bond yields ease

The end of the lockdown in Victoria is an upside risk to our forecast that consumption will be unchanged in Australia in Q2. Meanwhile, S&P upgraded Australia’s credit rating outlook but that has little implication for Australian bond yields. We expect yields to rise to 2% by the end of the year as the RBA starts to taper its weekly bond purchases in November.

11 June 2021

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

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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