March 1, 2024

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New economic forecasts from the Reserve Bank of Australia point to lower growth and inflation in 2024

New economic forecasts from the Reserve Bank of Australia point to lower growth and inflation in 2024

Updated economic forecasts for 2024 and 2025 show slight shifts in GDP and CPI forecasts.

For 2024, the GDP forecast has been revised slightly downwards from the initial forecast of 2.0% to 1.8%. The CPI forecast for the same year was also revised slightly, moving from 3.5% to 3.2%. This decline in CPI forecasts could indicate a more positive inflation outlook than initially expected, and faster interest rate cuts, although still some way off target.

Moving to 2025, GDP expectations also saw a slight decline from 2.4% to 2.3%. This adjustment, although modest, indicates continued expectations of strong economic growth, albeit slightly. On the inflation front, the CPI forecast for 2025 was revised downwards from 2.9% to 2.8%. This continuing trend of small adjustments in inflation expectations indicates stabilization of price increases, in line with targeted inflation rates and indicates the potential for price easing over time.

But what is important to keep in mind here is that 2.8% is still at the high end of the RBA's 2-3% inflation target.

New 2025 predictions:

Economic indicator December 2025 forecast (old) December 2025 forecast (new)
Gross Domestic Production 2.4% 2.3%
Home consumption 2.6% 2.6%
Housing investment 3.8% 2.0%
Investing in business 2.0% 1.8%
Public demand 3.0% 2.8%
Total national expenditure 2.7% 2.7%
Imports 5.0% 3.9%
exports 3.3% 2.4%
Real disposable household income 3.6% 3.5%
Transaction terms -1.2% -3.6%
Major Trading Partner (Export Weighted) GDP 3.0% 3.0%
Unemployment rate (quarterly, %) 4.3% 4.4%
employment 1.4% 1.4%
Wage price index 3.5% 3.4%
Average nominal (non-agricultural) income per hour 3.8% 3.8%
Deflation means inflation 2.9% 2.8%
Consumer price index 2.9% 2.8%
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Here are the new forecasts for December 2024 compared to previous forecasts:

Economic indicator December 2024 forecast (old) December 2024 forecast (new)
Gross Domestic Production 2.0% 1.8%
Home consumption 2.1% 1.7%
Housing investment 2.0% -1.5%
Investing in business 0.3% 1.2%
Public demand 1.3% 1.1%
Total national expenditure 2.0% 1.9%
Imports 4.1% 3.9%
exports 3.6% 3.1%
Real disposable household income 2.5% 2.5%
Transaction terms -4.5% -4.2%
Major Trading Partner (Export Weighted) GDP 3.1% 3.1%
Unemployment rate (quarterly, %) 4.2% 4.3%
employment 1.5% 1.2%
Wage price index 3.7% 3.7%
Average nominal (non-agricultural) income per hour 4.2% 4.3%
Deflation means inflation 3.3% 3.1%
Consumer price index 3.5% 3.2%