Euler Hermes
Economic Outlook no. 1189-1190 |Macroeconomic, Risk and Insolvency Outlook
Australia
A more moderate growth
Overview After a +3.5% rebound in 2012, our forecasts call for a slowdown in activity to 2.6% in 2013. This is explained by a difficult H1 2013 due to (1) weaker export performance linked to sagging global demand and weak commodity prices, (2) a slowdown in public sector spending. The economy is likely to be more upbeat in the second half of 2013, driven by an improvement in the outlook for external trade. The balance of risks is positive. The financial risk is low, given the soundness of the banking system and public finances. Therefore, the pressure on growth remains contained, on the back of solid domestic demand.
Insolvencies in number of cases
10,000 12,000
2,000 4,000 6,000 8,000
0 9 9 9 9 9 0 0 0 0 0 1 1319753197531 Sources: ASIC, Euler Hermes forecasts Insolvencies by region 2012
Austerity continues, while monetary policy remains expansionary. The fis- cal austerity measures will be main- tained in 2013, although expectations in terms of tax revenues have been revised downwards in order to main- tain sound public finances. Growth will probably be bolstered by continued monetary expansion, reflected by the cut in the key policy rate in December 2012 (by 0.25 pp to 3%).
Households are likely to remain cau- tious. While leading indicators (decel- erating retail sales, falling credit demand) point to a slowdown in the short term, it will probably be merely cyclical, as household demand is expected to rebound afterwards, boosted by the monetary easing meas- ures and by encouraging factors (rather stable and improving labor market in the medium term, positive trend in purchasing power over the past few years).
Investment will continue to grow, but at a slower pace than in previous years. The investment boom linked to the mining sector will slowdown in line with the deceleration in Chinese demand and the uncertainties sur- rounding the trend in commodity prices. Also, the Bureau of Resources
40
and Energy Economics (BREE) has low- ered its forecasts of expected tax rev- enues from the mining sector, as the number of projects linked to this sector is expected to fall (due to cancellation or postponement). The outlook for con- struction is weak in the short term due to a slowdown in the number of loans for purchases of housing, and a decline in order books in construction at the end of 2012. Company failures will probably continue to rise (+3% in 2013 after +5% in 2012). This trend is partly explained by the weakened outlook, and partly by the vigor of business demography.
The contribution of foreign trade will become virtually neutral. Imports will increase at a limited pace in line with the slowdown in investment. Exports will slowdown, hampered by (1) the weakness of Japanese and European demand and (2) the slowdown in Chinese growth._CB/MI
Number Change* Share of total
New South Wales Victoria
Queensland
South Australia Western Australia Tasmania
Northern Territory
4,309 2,691 2,049 413 750 92 35
Australian Capital Territory 142 Total
* Janv-Dec ‘12 to Janv-Dec ‘11 Source: ASIC
10,481
7,8% 41,1% 10,0% 25,7% 3,8% 19,5% 18,7% 3,9% 19,4% 7,2% 33,3% 0,9% 20,7% 0,3% 32,7% 1,4% 9,2% 100%
Note pays structurelle
FFI
Country Risk Level AALOWCRI
L 1
Change over the period, unless otherwise indicated: * contribution to GDP growth ** AUD bn
Economic forecasts AUSTRALIA
GDP
Consumer Spending Public Spending Investment Stocks Exports Imports
Net exports Current account * **
forecasts
share 2011 2012 2013 2014 100% 2.4 3.5 54% 18% 27% 1%
3.3 2.5 7.2
21% -0.8 21% 10.6
Current account (% of GDP) Unemployment rate Inflation
General go. balance ** **
3.5 3.5 7.9
0.6 -0.9 5.1 6.6
1% -2.2 -0.3 -33
-59
-2.3 -3.9 5.1 3.3 -56
23 24
5.3 2.2 -28
General gov. balance (% of GDP) -3.9 -1.9 Public debt (% of GDP) Nominal GDP
2.6 2.6 0.7 3.8
-0.1 3.3 3.0 0.1 -80 -5.1 5.3 2.9 -7
-0.5 23
Sources: IHS Global Insight, National data, IMF, Euler Hermes forecasts
3.2 3.3 0.7 5.4 0.0 3.9 5.0
-0.2 -76 -4.5 4.9 2.7 -4
-0.3 21
1,445 1,496 1,577 1,676
4,314 4,922
6,208
6,634 6,661
6,618 7,277
7,737 7,521 9,113
9,437 9,601 10,481 10,990 11,300
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