2019 is likely to be an interesting year for the Australian economy. Some of the big drags of recent years are receding but housing is turning down, uncertainty is high around the global outlook and it’s an election year, which will add to uncertainty. This note looks at the main issues around the housing downturn and what it means for the economy and investors.
- Australian growth has slowed again. The housing cycle downturn and its impact on the economy will likely see growth constrained to around 2.5-3%.
- As a result, spare capacity is likely to remain significant, keeping wages, growth and inflation low.
- The RBA is likely to cut rates in 2019 and the housing downturn will likely see Australian shares continue to under-perform global shares.
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