CBA summary points for their predictions:
- We expect GDP growth to be 0.7%/year in Q4 ’23 and 1.9%/year in Q4 ’24.
- Flat real household consumption broadly over the remainder of 2023 is at the heart of our forecast for the economy to grow significantly below trend and stagnant per capita for the remainder of this year.
- We have put the odds of a recession in 2023 at 50% as the delayed impact of the RBA rate hike continues to drain the cash flow of debt-carrying households.
- We expect the annual rate of inflation to decline to 3.8% by late 2023 (we expect core inflation to be 3.6%/year in Q4-23).
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We expect the unemployment rate to increase through 2023 to end the year at 4.4% and to be 4.7% by mid-2024.
- Our economic outlook is conditional on a recent 25 basis point increase in the cash rate in Q3 ’23 for this cycle’s peak of 4.35%. It is also conditional on easing 125 basis points from the policy in 2024.
- Monetary policy is now very tight, which by definition means that the economy will slow materially from here
This article was written by Eamon Sheridan on www.forexlive.com.
