UBS economic perspectives
Scott Haslem, UBS Chief Economist, talks about how the Australian economy has performed so far this year and growth in the non-mining sectors. This video forms part of UBS Neo, now included in AustralianSuper’s Member Direct option.
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Well, it's certainly true that the quarterly growth did halve in the midyear from around 1% to half a percent, but a lot of that has to do with volatility in the external accounts. If we strip that away and look at the underlying economy, we have seen some improvement in the consumer. We have seen a pretty strong pickup in consumption. So the underlying, the domestic economy has certainly picked up from about 2% to about 3%...
Well, mining is going to remain a significant part of the economy because we're now moving to the exports after all the CapEx. But here, a quarter ago, net exports were adding about 80% of the impulse to the economy in terms of growth. That's down to around 40% now. So we are seeing the economy rebalance away from mining, and we've actually seen non-mining GDP growth almost double over the past year from about 1% to a bit over 2%.
Well, I don't think we're going to see growth pick up much above 3% over the next couple of years. There's just too many headwinds who restrain economy, from a slower China, falling commodity prices, to the end of our own CapEx boom. But we are expecting is within that 3%, to see more growth coming out of the domestic economy to see an ongoing improvement in the consumer, an ongoing pickup in the housing sector. And that should create enough jobs to stop the unemployment rate going up further. So overall, the outlook is one where things are getting better. They're probably not great, and growth is going to be close to 3%, but not really above trend.