Alex Joiner, chief economist at IFM Investors, has posted several interesting charts derived from the Reserve Bank of Australia’s (RBA) latest Statement of Monetary Policy, which was released on Tuesday.
Curiously, the RBA has lifted its growth profile for the Australian economy:
Source: Alex Joiner (IFM Investors)
This is despite a slightly lower growth profile for household consumption:
Source: Alex Joiner (IFM Investors)
And far lower projected dwelling investment:
Source: Alex Joiner (IFM Investors)
On the other hand, business investment is expected to be a little stronger than previously projected:
Source: Alex Joiner (IFM Investors)
However, the most curious aspect of the RBA’s upward revision to GDP growth is that it has arrived amid an expected sharp decline in population growth, from 2.47% currently to 1.40%:
As noted by Alex Joiner, “where’s the productivity coming from?”.
That is a pertinent question given that the SoMP complained that Australia’s labour productivity has fallen to 2016 levels:
“Labour productivity is now around the same level as in 2016. Productivity outcomes have been weak in most market and non-market industries over the past few years”, the RBA SoMP said.
Without turbo-charged population growth, it seems unlikely that Australia will meet the RBA’s GDP growth projection.
As noted by Joiner, “maybe this growth is coming from a materially lower cash rate assumption”:
