Products
Platforms
Accounts
Inspiration
About
Support
For institutions
Log in Open account
International
CFDs and forex (FX) are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. 
Show more
CFDs and forex (FX) are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX, or any of our other products work and whether you can afford to take the high risk of losing your money.
Show less
Big Aussie GDP miss puts RBA forecasts in jeopardy

Big Aussie GDP miss puts RBA forecasts in jeopardy

Macro
Strats-Eleanor-88x88
Eleanor Creagh

Australian Market Strategist

Summary:  Australia's Q3 GDP miss puts the country on track for a far lower rate of growth than the central bank is forecasting.

• Q3 real GDP growth comes in at 0.3% quarter-on-quarter, expectations were for 0.6% while the prior figure was 0.9%.
• Annual pace of growth slows to 2.8% versus a forecasted 3.3%, down from 3.1% and revised from 3.4%.

Ouch! A big miss for GDP in Australia where quarterly GDP growth slid back to 0.3% from 0.9% last quarter, putting the annual GDP growth rate at 2.8%. The pace of expansion is the weakest since Q3'16 when GDP contracted. This is an unnerving drop and confirms the mounting headwinds and growing chorus of expectations that GDP growth will likely be weaker than the Reserve Bank of Australia’s own 3.5% average GDP growth for the coming year.

To meet the 3.5% target for December 2018, the Australian economy would have to advance more than 1% in the coming quarter – not impossible, but unlikely. The last time the economy grew more than 1% in a quarter was back in September 2011 (1.3% q/q GDP growth).

Household spending and private investment both stumbled, weighing on growth. All eyes are on the household indicators with house prices continuing to fall and consumption accounting for around two-thirds of the economy. The effect of a sustained fall in the housing market is a key risk to forecasts and not to be underestimated. The household savings ratio fell to 2.4%, the lowest level since the financial crisis, but this drawdown is failing to support strengthened household consumption. Household spending growth slowed from 0.9% in Q2 to 0.3% against a declining household savings ratio. 
 
Household savings and consumption expenditures (Australia)
The combination of soft household consumption and negative household income growth per capita is cause for concern against the backdrop of a cooling housing market, tighter lending standards and a slowdown in global growth predicted for next year.

The recent strength in the labour market, with unemployment at the lowest level since 2012, may offset the negative wealth effect and fall in consumer spending from the sliding housing market – at least this is what the RBA is banking on. But the risks are mounting that not only will the RBA will have to lower its 3.5% annualised growth forecasts for 2019 as the economy loses momentum, but also the upbeat tone surrounding rate hikes and the likely “next move is up”.

On that basis the RBA looks set to remain on hold for the foreseeable future, and risks are starting to stack up on the downside that the next move could be a rate cut.

Quarterly Outlook

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
    Read full article
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

    Read full article
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

    Read full article
  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

    Read full article
  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

    Read full article
  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

    Read full article
  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

    Read full article
  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

    Read full article
  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

    Read full article
  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

    Read full article

Content disclaimer

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Bank A/S and its entities within the Saxo Bank Group provide execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer and notification on non-independent investment research for more details.
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International
Products & pricing
Platforms
Accounts & service
General
Other
Legal

All trading and investing comes with risk, including but not limited to the potential to lose your entire invested amount.

Information on our international website (as selected from the globe drop-down) can be accessed worldwide and relates to Saxo Bank A/S as the parent company of the Saxo Bank Group. Any mention of the Saxo Bank Group refers to the overall organisation, including subsidiaries and branches under Saxo Bank A/S. Client agreements are made with the relevant Saxo entity based on your country of residence and are governed by the applicable laws of that entity's jurisdiction.

Apple and the Apple logo are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.