Jason Daw, Research Analyst at TDS, notes that the Australian GDP growth ended 2015 on a high, defying widespread forecast downgrades yesterday (including TD), with annual GDP growth surging to an above-trend 3%/yr, the highest pace in two years.
Key Quotes
“The outcome was firmer than the +½%/qtr and 2½%/yr the RBA projected in its recent Statement on Monetary Policy and assists in understanding why employment growth was stronger than expected in H2 2015.
The better result was a combination of small upsides to consumption, plant and equipment investment, and inventories compared with our forecasts.
Annual GDP growth was 2.6% in 2014 (unchanged) while 2015 was 2.5%, matching most expectations. Our 2016 forecast is 2.7% (RBA 2½%) and we pencil in above-trend 3% growth for 2017 (RBA 3%).
The RBA Board yesterday again defied the doves with a straight bat view of “reasonable” growth and low inflation. While the Board left an easing bias on the table, it remains data-dependent, and today the hurdle to ease just got a little higher.”
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