Australia’s real GDP growth likely to slow to 2.5 pct by 2018, says Scotiabank

Australia’s economy is likely to stay as the most rapidly expanding major advanced economy in 2018, according to Scotiabank. In spite of its strong performance, Australia is expected to witness negative impact of low commodity prices and subdued import demand from China.

Furthermore, Australia’s economy is undergoing a structural change after the end of a recent resource investment boom and is searching for alternate growth sources from non-mining related domestic demand, noted Scotiabank. During the transition, increased export volumes that show mining project completions have boosted the real GDP growth, assisting the economy achieve above-trend output gains.

Even as Australia is adjusting quite well to the new economic reality, persistent downward trend in the mining investment and a lower contribution from net exports is expected to lead to a slightly slower economic momentum in coming years.

“We expect the nation’s real GDP growth to decelerate to still-sound 2½% y/y by 2018 from the current pace of around 3%”, added Scotiabank.