HSBC’s Paul Bloxham likes to use the New Year as a confession season and today he releases an epic study of Australian rebalancing that has a more bearish tone than we are used to, but still with a bullish conclusion. It’s a solid report that makes the conventional case for a grinding recovery in Australian growth.
I have only three points of difference. The first is that Bloxo see only a 2% of GDP fall in mining investment in the next two years. That’s bullish and leaves his basic assumptions open to question. Second, and related, he sees Australia’s terms of trade remaining high, much higher than I do ( though I agree they will remain high). Third, if Bloxo reckons that Australia’s potential growth rate has fallen to 2.8% then why has he got 2015 growth pegged at 3.4% but inflation still contained?
That aside, for the cautious optimist this is a sound piece of work that will reassure.
