Exclusive: Gerard Minack on Australia’s double shock

Exclusively from Gerard Minack at Minack Associates:

Australia remains stuck with the macro blahs: tepid growth in aggregate and stagnation per person.  The risks are skewed to the downside.  The key to the downside unfolding is not whether there’s a fluky one quarter GDP decline, but whether the labour market weakens.  Falling employment would trigger powerful adverse feedback loops that likely cause a major recession.  Expect the RBA to ease again to reduce this risk – unless fiscal policy is quickly deployed – and the A$ to continue to soften.

Australia’s domestic expansion remains sub-par, despite record-low interest rates, a below-average A$, and recent tax cuts.  It’s easy to see why: labour pay and household disposable income have stagnated in real terms since late 2011 (Exhibit 1).

There are 1628 words left in this subscriber-only article.

Start your free 14-day trial today!

Comments are hidden for Membership Subscribers only.