Forecasts
Forecast Update of 9 November 2011
The latest economic forecasts, from our new forecasting model, suggest that:
- the post-GFC recovery has hit a soft patch but should resume from mid-2012
- after GDP growth of 2% for 2010/11, we forecast future growth (rounded) of 2.5% for 2011/12, 3% for 2012/13, and 3.5% for 2013/14
- the current soft patch will see unemployment rise further, close to 6%, before it starts to fall
- this softening labour market means that, excluding the one-off impact from the introduction of the carbon tax, inflation is heading down to 2%
- under this outlook for inflation and unemployment, the Reserve Bank should cut the cash rate further, from 4.5% to 4.0%, within 12 months
- high commodity prices should keep the AUD near parity with the USD in the short term
- the share market appears under-valued, and will be supported by the sustained economic recovery to come
The Forecasting Model
These are the first forecasts from our new short-term forecasting model of the Australian economy, which is a structural VAR model. It has a
special focus on how Australia is affected by global developments, which are playing a key role as we deal with the aftermath of
the GFC. Separate to this, Independent Economics has other completely new models under development, a Computable
General Equilibrium model and a Macroeconometric Model, for release in the first half of 2012.
Download the Forecasts
Download "Economic and Financial Market Outlook".
For more information, email Dinar Prihardini or phone her on 0419 024 330.
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