World gives Aust ‘picture perfect’ outlook

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Deloitte Access Economics economist Chris Richardson expects the momentum in Australian economic and jobs growth to continue into 2018.

The strongest global growth in years should mean the pick-up in Australia’s economic expansion over 2017 maintains momentum through 2018 allowing the record-breaking run of strong jobs growth to continue.

Economist Chris Richardson also expects in the latest Deloitte Access Economics quarterly business outlook inflation to remain weak which will keep the threat of any interest rate rises at bay.

“The global backdrop is picture perfect for Australia’s 2018,” Mr Richardson told AAP on Monday.

It should benefit the commodity export states of Western Australia, Queensland and the Northern Territory while continuing record-low interest rates will be a relief to active housing markets of NSW, Victoria and the ACT.

The report comes ahead of official inflation figures on Wednesday.

Economists expect the consumer price index will rise by around 0.8 per cent, lifting the annual rate of inflation to 2.1 per cent but still around the bottom of the Reserve Bank’s two to three per cent inflation target band.

The more interest-rate sensitive measures of underlying inflation – which smooth out volatile price swings – are expected to remain below an annual rate of two per cent.

However, Mr Richardson says despite the positive outlook for growth and employment, families are unlikely to be happy until wage growth finally climbs off the floor.

“That’s because jobs growth is excellent news for the few, while wage growth is positive news for the many,” he says.

While he sees wage growth as being near its low, any gains from here are likely to be slow and modest and below official forecasts.

Looking further ahead into 2019, he expects some of the features of today’s economy will have eased with the bad news on wages getting better, but the good news on jobs and interest rates starting to fade.

This article appeared on SBS news on 29 January 2018.

View the original article here.