stream Global developments will also matter, not least what other central banks are doing. It is vital, however, that appeals for more government spending (or regulatory intervention, for that matter) continue to be subject to rigorous analysis to ensure that the government gets the best bang for its buck, maximises the fiscal multiplier and the long-term prospects for Australia. Tap image to zoom.

What’s more, ANZ Research thinks the fiscal measures will be large enough to push the RBA to the sidelines for some time. Bureau of Economic Analysis. 166 0 obj <> endobj 193 0 obj <>/Encrypt 167 0 R/Filter/FlateDecode/ID[<271B1929432640DBBB39E4E3CEB370E1><1AED0E3C048F450986F57D32BE0C6D4D>]/Index[166 67]/Info 165 0 R/Length 113/Prev 1033500/Root 168 0 R/Size 233/Type/XRef/W[1 2 1]>>stream Along with a solid increase in public consumption, ANZ Research expects public demand will rise above 30 per cent of GDP for the first time since the mid-1980s.

ANZ Research’s assumption of large scale fiscal stimulus underpins the outlook for a solid recovery in 2021. Economists at New Zealand's largest bank have upgraded their forecasts for the coming year, picking the booming housing market will boost confidence. But it is not clear how long this will continue to be the case. In contrast, private sector spending is likely to remain under pressure over the next year. Certainly ANZ Research doesn’t think there is any need to do so over concern about an approaching constraint on government debt. This email address is already subscribed to the list. ANZ Research expects GDP to have expanded at a modest pace in the September quarter with the opening up of businesses and easing of restrictions outside Melbourne more than offsetting another fall in activity in Victoria. "Accessed Oct. 12, 2020. ", New Zealand's economic outlook brighter, but still terrible - NZ Herald, Election 2020: Prefu - Covid-19 impact on NZ economy not as bad as feared but 'profound uncertainty', Covid 19 coronavirus: Impact on NZ economy 'may not be as severe' as predicted - NZ Herald, Higher Fonterra forecast means $10 billion boost for rural economy - NZ Herald, Covid-19 set to hit red meat sector hard in 2020/21, Owen Glenn's $40m battle with former Hanover co-owner Eric Watson, Privacy Act: A small step in the right direction, Paul Brislen: What my briefing to the incoming IT Minister would say, Revealed: NZ Super Fund's largest tech investments, Facebook flop.

5W|�*P�Y��4�:�������7�y���>�v�U�$�!����O��J^`�U��_]ɜ�6I��}ӈg��1}Ռ%Y���+aG� ���ݤ+M��ވ �*i=�/�ج��$�}҈. The current one was caused by the response to a health crisis rather than higher interest rates flowing from an economy that was overheating. We expect that the RBNZ will drop the OCR 50bps in April next year, but risks around this outlook are looking more balanced, rather than firmly to the downside. Having the RBA include possible changes in fiscal policy in its forecasts could be interpreted as an attempt to intrude directly into the policy development process. "But downside risks remain. With that in mind, ANZ Research thinks it imperative that policy remains stimulatory for an extended period. Although life has returned to relative normality in the other states and territories, Victoria’s ongoing restrictions are having a knock-on effect. At the very least, the RBA will want to incorporate as much of the new fiscal settings into its forecasts before it considers taking any further policy steps itself. Even so, ANZ Research believes one of the takeaways from the last two recessions and the GFC – that it takes many years for the labour market to recover – will apply this time too. This reduces the prospect of the RBA being surprised to the downside, which reinforces ANZ Research’s view Australia is in for a period of stability on the monetary policy front – assuming, critically, the judgement ANZ Research is making about fiscal settings is broadly right. But the RBA expectations for employment over the rest of this year are already quite negative. The extended lockdown in Victoria has severely hit Q3 growth and much of the fiscal support is scheduled to end in Q4. However, it sees a negative first quarter for 2021 followed by low growth through into 2022 as the impact of closed borders and the global downturn takes its toll. Felicity Emmett is Senior Economist and David Plank is Head of Australian Economics at ANZ. This email is already subscribed to the list. In ANZ Research’s view it will take until the September quarter 2022 to claw back the losses from the first half of 2020 and bring GDP back to its pre-pandemic level. This is understandable. ANZ now forecasts GDP growth of 10 per cent in the quarter to September 20 and growth of 2.5 per cent the December quarter. ANZ 2020 GLOBAL MARKET OUTLOOK. It does mean, however, that when fiscal settings change materially, the RBA’s forecasts can become out of step with what is happening. "The unemployment rate is expected to rise a bit more slowly than previously assumed, with activity a little stronger, the wage subsidy delaying job losses, and effects of the closed border not evident just yet.". Importantly, the prospects for a global recession have now eased. The deficit in 2021 is projected to be 8.6 percent of GDP. This makes a policy change in October very unlikely, in ANZ Research’s view. World Economic Outlook Update, June 2020: A Crisis Like No Other, An Uncertain Recovery June 24, 2020 Description: Global growth is projected at –4.9 percent in 2020, 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast. This implies it expects substantial employment losses over the second half of 2020, such that employment could approach the low point recorded in May when most of the country was still under tight restrictions.

At 16.0 percent of gross domestic product (GDP), the deficit in 2020 would be the largest since 1945. After a modest improvement in the second half of 2020, ANZ Research now expects growth to bounce back solidly through 2021 and forecast growth of 5.0 per cent through the year. ANZ spending data show spending accelerated out of the lockdown, through June and July, supported by a second round of household stimulus payments in early July. These divergences aside, business conditions have picked up solidly in every state from the average in Q2. In the August Statement on Monetary Policy, the RBA forecast by the end of the year the unemployment rate would hit 10 per cent and employment would have contracted by 6 per cent year-on-year. This spending will be aimed at supporting incomes in the short term and driving jobs growth in the medium term. Live: 11 Covid-infected seamen at Chch hotel, 14 more cases 'under investigation', Watch live: Police respond to sex assault allegations against Wellington musicians. When thinking about the economic and social costs of high unemployment, ANZ Research thinks the bigger mistake would be to withdraw stimulus too early. After slowing for the past couple of years, a modest global recovery seems likely in 2020. ANZ Research’s view, however, is this premature withdrawal of stimulus will not eventuate. A larger/smaller magnitude of stimulus would have upside/downside risks for forecasts while the same is true of support measures with higher or lower fiscal multipliers. Something goes wrong, please refresh and try again. In the 2020-21 Commonwealth Budget, due to be handed down on 6 October, ANZ Research expects further announcements of large scale fiscal stimulus. The monetary policy response has, however, been more moderate. Massive fiscal stimulus has so far sheltered Australia from the worst of the economic impacts of pandemic-associated shutdowns. Public spending will be the major driver of growth in 2021. It is picking unemployment will come in at 5.4 per cent for the September quarter but will rise steadily to peak at 7.4 per cent by late 2021. ANZ Research’s assumption of large scale fiscal stimulus underpins the outlook for a solid recovery in 2021. Photo / Dean Purcell. With ‘shovel-ready’ infrastructure likely to start as quickly as possible, as well as other ‘nation-building’ projects, public investment is likely to rise quite strongly. Senior Economist & Head of Australian Economics, ANZ. These differences mean ANZ Research needs to be cautious about drawing too many lessons from past events. Fiscal support, complemented with other measures like loan payment deferrals for both mortgages and business loans and temporary protection from insolvency, has so far prevented some of the worst of the second round impacts normally apparent in deep economic downturns. The RBA’s approach is to take existing fiscal settings for its forecasts rather than try to build in possible changes. If ANZ Research is close to being right on the size and scope of fiscal developments in the coming federal and state budgets, then this fate will befall the RBA’s August forecast update. Moreover, ANZ Research expects state governments to announce large support packages of their own. Household consumption will be weighed down by the winding back of government payments to households (as the JobKeeper and JobSeeker levels fall), a weak labour market and ongoing caution about both the health and economic outlook. © Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522.
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anz economic outlook 2020


Different measures will have different multipliers and varying impacts. After a modest improvement in the second half of 2020, ANZ Research now expects growth to bounce back solidly through 2021 and forecast growth of 5.0 per cent through the year. In this environment, ANZ Research expects there will be much lobbying for government support. If ANZ Research’s outlook proves to be too cautious then this will be a good problem to have, with policy able to tightened if activity recovers faster than expected. Since then spending growth has slowed across the country, most markedly in Victoria where spending has been below year-ago levels since mid-July and in New South Wales where growth has been flat-lining since early August. Household spending has also improved from its April low point although the initial surge has now largely faded. While gross domestic product (GDP) fell a record 7 per cent in the June quarter, the result would have been far worse without fiscal support amounting to close to 15 per cent of GDP in the quarter. A U-turn by the US Fed on monetary policy looks to have orchestrated a soft landing for the US economy with China and Europe providing incremental support.

Similarly, businesses will remain unwilling to invest and hire until the path for the economy looks clearer. With support payments set to be reduced sharply from the end of September, however, the outlook for household spending is particularly uncertain. Summer 2020 Economic Forecast: A deeper recession with wider divergences The EU economy will experience a deep recession this year due to the coronavirus pandemic, despite the swift and comprehensive policy response at both EU and national levels. These spending numbers have been boosted by the very large fiscal stimulus directed towards households. As we begin the second half of 2020, let’s look at the performance of the global economy so far this year and the projections for the rest of 2020 and 2021.

In particular, developments in the labour market. New Zealand's economic outlook brighter, but still terrible - NZ Herald; Election 2020: Prefu - Covid-19 impact on NZ economy not as bad as feared but 'profound uncertainty' The outlook continues to be dominated by the global spread of the COVID-19 novel coronavirus and economic toll of country lockdowns instituted around the world to stem the spread of the virus. $o��@�A$v H�ۀ�1 ��$���d��FK�-H����"A��0酳�s� ��$��� �L�� S�$�i�m� �K� endstream endobj startxref 0 %%EOF 232 0 obj <>stream Global developments will also matter, not least what other central banks are doing. It is vital, however, that appeals for more government spending (or regulatory intervention, for that matter) continue to be subject to rigorous analysis to ensure that the government gets the best bang for its buck, maximises the fiscal multiplier and the long-term prospects for Australia. Tap image to zoom.

What’s more, ANZ Research thinks the fiscal measures will be large enough to push the RBA to the sidelines for some time. Bureau of Economic Analysis. 166 0 obj <> endobj 193 0 obj <>/Encrypt 167 0 R/Filter/FlateDecode/ID[<271B1929432640DBBB39E4E3CEB370E1><1AED0E3C048F450986F57D32BE0C6D4D>]/Index[166 67]/Info 165 0 R/Length 113/Prev 1033500/Root 168 0 R/Size 233/Type/XRef/W[1 2 1]>>stream Along with a solid increase in public consumption, ANZ Research expects public demand will rise above 30 per cent of GDP for the first time since the mid-1980s.

ANZ Research’s assumption of large scale fiscal stimulus underpins the outlook for a solid recovery in 2021. Economists at New Zealand's largest bank have upgraded their forecasts for the coming year, picking the booming housing market will boost confidence. But it is not clear how long this will continue to be the case. In contrast, private sector spending is likely to remain under pressure over the next year. Certainly ANZ Research doesn’t think there is any need to do so over concern about an approaching constraint on government debt. This email address is already subscribed to the list. ANZ Research expects GDP to have expanded at a modest pace in the September quarter with the opening up of businesses and easing of restrictions outside Melbourne more than offsetting another fall in activity in Victoria. "Accessed Oct. 12, 2020. ", New Zealand's economic outlook brighter, but still terrible - NZ Herald, Election 2020: Prefu - Covid-19 impact on NZ economy not as bad as feared but 'profound uncertainty', Covid 19 coronavirus: Impact on NZ economy 'may not be as severe' as predicted - NZ Herald, Higher Fonterra forecast means $10 billion boost for rural economy - NZ Herald, Covid-19 set to hit red meat sector hard in 2020/21, Owen Glenn's $40m battle with former Hanover co-owner Eric Watson, Privacy Act: A small step in the right direction, Paul Brislen: What my briefing to the incoming IT Minister would say, Revealed: NZ Super Fund's largest tech investments, Facebook flop.

5W|�*P�Y��4�:�������7�y���>�v�U�$�!����O��J^`�U��_]ɜ�6I��}ӈg��1}Ռ%Y���+aG� ���ݤ+M��ވ �*i=�/�ج��$�}҈. The current one was caused by the response to a health crisis rather than higher interest rates flowing from an economy that was overheating. We expect that the RBNZ will drop the OCR 50bps in April next year, but risks around this outlook are looking more balanced, rather than firmly to the downside. Having the RBA include possible changes in fiscal policy in its forecasts could be interpreted as an attempt to intrude directly into the policy development process. "But downside risks remain. With that in mind, ANZ Research thinks it imperative that policy remains stimulatory for an extended period. Although life has returned to relative normality in the other states and territories, Victoria’s ongoing restrictions are having a knock-on effect. At the very least, the RBA will want to incorporate as much of the new fiscal settings into its forecasts before it considers taking any further policy steps itself. Even so, ANZ Research believes one of the takeaways from the last two recessions and the GFC – that it takes many years for the labour market to recover – will apply this time too. This reduces the prospect of the RBA being surprised to the downside, which reinforces ANZ Research’s view Australia is in for a period of stability on the monetary policy front – assuming, critically, the judgement ANZ Research is making about fiscal settings is broadly right. But the RBA expectations for employment over the rest of this year are already quite negative. The extended lockdown in Victoria has severely hit Q3 growth and much of the fiscal support is scheduled to end in Q4. However, it sees a negative first quarter for 2021 followed by low growth through into 2022 as the impact of closed borders and the global downturn takes its toll. Felicity Emmett is Senior Economist and David Plank is Head of Australian Economics at ANZ. This email is already subscribed to the list. In ANZ Research’s view it will take until the September quarter 2022 to claw back the losses from the first half of 2020 and bring GDP back to its pre-pandemic level. This is understandable. ANZ now forecasts GDP growth of 10 per cent in the quarter to September 20 and growth of 2.5 per cent the December quarter. ANZ 2020 GLOBAL MARKET OUTLOOK. It does mean, however, that when fiscal settings change materially, the RBA’s forecasts can become out of step with what is happening. "The unemployment rate is expected to rise a bit more slowly than previously assumed, with activity a little stronger, the wage subsidy delaying job losses, and effects of the closed border not evident just yet.". Importantly, the prospects for a global recession have now eased. The deficit in 2021 is projected to be 8.6 percent of GDP. This makes a policy change in October very unlikely, in ANZ Research’s view. World Economic Outlook Update, June 2020: A Crisis Like No Other, An Uncertain Recovery June 24, 2020 Description: Global growth is projected at –4.9 percent in 2020, 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast. This implies it expects substantial employment losses over the second half of 2020, such that employment could approach the low point recorded in May when most of the country was still under tight restrictions.

At 16.0 percent of gross domestic product (GDP), the deficit in 2020 would be the largest since 1945. After a modest improvement in the second half of 2020, ANZ Research now expects growth to bounce back solidly through 2021 and forecast growth of 5.0 per cent through the year. ANZ spending data show spending accelerated out of the lockdown, through June and July, supported by a second round of household stimulus payments in early July. These divergences aside, business conditions have picked up solidly in every state from the average in Q2. In the August Statement on Monetary Policy, the RBA forecast by the end of the year the unemployment rate would hit 10 per cent and employment would have contracted by 6 per cent year-on-year. This spending will be aimed at supporting incomes in the short term and driving jobs growth in the medium term. Live: 11 Covid-infected seamen at Chch hotel, 14 more cases 'under investigation', Watch live: Police respond to sex assault allegations against Wellington musicians. When thinking about the economic and social costs of high unemployment, ANZ Research thinks the bigger mistake would be to withdraw stimulus too early. After slowing for the past couple of years, a modest global recovery seems likely in 2020. ANZ Research’s view, however, is this premature withdrawal of stimulus will not eventuate. A larger/smaller magnitude of stimulus would have upside/downside risks for forecasts while the same is true of support measures with higher or lower fiscal multipliers. Something goes wrong, please refresh and try again. In the 2020-21 Commonwealth Budget, due to be handed down on 6 October, ANZ Research expects further announcements of large scale fiscal stimulus. The monetary policy response has, however, been more moderate. Massive fiscal stimulus has so far sheltered Australia from the worst of the economic impacts of pandemic-associated shutdowns. Public spending will be the major driver of growth in 2021. It is picking unemployment will come in at 5.4 per cent for the September quarter but will rise steadily to peak at 7.4 per cent by late 2021. ANZ Research’s assumption of large scale fiscal stimulus underpins the outlook for a solid recovery in 2021. Photo / Dean Purcell. With ‘shovel-ready’ infrastructure likely to start as quickly as possible, as well as other ‘nation-building’ projects, public investment is likely to rise quite strongly. Senior Economist & Head of Australian Economics, ANZ. These differences mean ANZ Research needs to be cautious about drawing too many lessons from past events. Fiscal support, complemented with other measures like loan payment deferrals for both mortgages and business loans and temporary protection from insolvency, has so far prevented some of the worst of the second round impacts normally apparent in deep economic downturns. The RBA’s approach is to take existing fiscal settings for its forecasts rather than try to build in possible changes. If ANZ Research is close to being right on the size and scope of fiscal developments in the coming federal and state budgets, then this fate will befall the RBA’s August forecast update. Moreover, ANZ Research expects state governments to announce large support packages of their own. Household consumption will be weighed down by the winding back of government payments to households (as the JobKeeper and JobSeeker levels fall), a weak labour market and ongoing caution about both the health and economic outlook. © Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522.

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