UBS Economic Perspectives

UBSEconomicPerspectives201412

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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Important information

This video has been prepared by UBS Securities Australia Limited ABN 62 008 586 481 AFSL 231098 (UBS) and represent the views of UBS not AustralianSuper.  The information is general information and general advice only and has been prepared without taking into account any member's objectives, financial situation or needs. The information is current at the time of recording but may have dated by the time of viewing. The most up-to-date UBS Neo research is available in Member Direct.  Refer to the video and relevant research report for the relevant disclosures and disclaimers. You must be a registered member of the Member Direct investment option to access UBS Neo Research.  Eligibility criteria and fees and charges apply. Find out more.

Video transcript

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%...
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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.
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