Australia set for two more years of sub-par economic growth: Reuters poll

Australia will experience another two years of sub-par economic growth, but lower interest rates and tax handouts should see it avoid a recession, according to economists polled by Reuters.

Economists in the poll forecasted that Australia’s AUS$1.9 trillion annual gross domestic product (GDP) would expand 2.1% in 2019, down significantly on the 2.7% prediction earlier in the year.

GDP growth was seen to rise to 2.5% in 2020, followed by 2.6% the year after, although that would still fall short of the 2.75% growth rate that is considered trend.

Annual growth in Australia has slowed to its lowest in a decade at just 1.8% with falling house prices and sluggish wage growth pushing consumers to limit spending.

In response, the Reserve Bank of Australia (RBA) has cut interest rates twice in as many months, taking them to an historic low of 1%, while regulators have relaxed rules on home loans to encourage bank lending.

In addition, many Australians will receive a tax giveaway from this month, which could flow through to consumption. These measures should see off the threat of a recession according to the economists in the poll, none of whom forecasted two successive quarters of declining GDP growth.