1. TOP POLICY CHALLENGES FOR GOVERNMENT
Tax and
federation
reform
Skills and
education
Workplace
relations
Energy and
climate
International
trade
Innovation and
infrastructure
Inflation is benign, the dollar is lower and the housing
sector is recovering. But the mining boom is all but
over and local business investment remains weak.
Unemployment is rising.
We expect the
Australian economy
to stay in the slow
lane in 2015.
WHY?
BUDGET DATES 2015
NSW
Mid-June
SOUTH AUSTRALIA
June
QUEENSLAND
Early June
WESTERN AUSTRALIA
Early May
VICTORIA
5 May
FEDERAL BUDGET
12 May
Non-dwelling
construction is
forecast to contract
further by
-10.0%(includes mining,
infrastructure, commercial and
industrial construction) -10.0%
2014-15f
-2.0%
2013-14e
2013-14a 2.5% 2014-15f 2.5% 2015-16f 3.0%
GDP GROWTH RATE FORECASTS
EMPLOYMENT participation rate
is declining as the population ages, and for cyclical reasons
UNEMPLOYMENT
rate is rising
from 6.0% to 2013-14 to 2014-15f
2012-13 65.1% 2013-14 64.7% 2014-15f 64.5%
TRENDS TO
WATCH IN 2015
Positives for Australian business
growth in 2015 include:
THE LOWER VALUE OF THE AUSTRALIAN DOLLAR
LOW INFLATION AND CONTAINED WAGE INFLATION
LOW INTEREST RATES
AUD/USDCURRENT Vs. 4 YEARS AGO
JAN
2012
1.06
JAN
2013
1.04
JAN
2014
0.88
29 JAN
2015
0.79
TREND
TREND
TREND
INFLATION (CPI) WAGES (WPI)
2.5%
2.6%
3.0% 2.5%
2013-14a 2014-15f
2013-14a
2014-15f
RBA cash rate is currently 2.50%
As of 4 pm AEDT
GROWTH IN
TOTAL NOMINAL
CREDIT TO
BUSINESSESNOV 2012
+2.6%pa
NOV 2013
+1.8%pa
NOV 2014
+4.6%pa
2013-14:+0.8%pa 2014-15f:+1.0%pa
LOWER OIL AND ENERGY COSTS
A RESURGENT HOUSING MARKET
RELATIVELY STABLE EMPLOYMENT GROWTH
RELATIVELY STRONG POPULATION GROWTH
RELATIVELY LOW GROWTH IN DEBT AMONG BUSINESSES
TREND
TREND
TREND
TREND
TREND
ESTIMATED RESIDENT POPULATION, JANUARY 2015
Estimated resident population growth rates 2012-13 1.75%pa 2013-14 1.7%pa 2014-15f 1.7%pa
WTI LIGHT CRUDE
($US/BBL)
CURRENT Vs. 3 YEARS AGO
JAN 2013
97.450
JAN 2014
97.530
JAN 2015
45.480
DWELLING
INVESTMENT
GROWTH
2013-14a 2014-15f
5.1%
Sources: Australian Bureau of Statistics; Australian Treasury; and Reserve Bank of Australia.
www.aigroup.com.au