Did the Australian Economy Contract over the September Quarter?
The consensus forecast for September quarter GDP growth to be released on Wednesday is 0.2%, with growth through the year seen at 1.9%. Market forecasts range from -0.3% q/q to 0.5% q/q. Dusting off the old top-down GDP model, I also get 0.2% q/q.
Growth would then have to accelerate slightly to 0.3% in the December quarter to be consistent with the RBA’s year-end forecast of 1.5%. That may be a tall order given what is happening both domestically and globally, but by no means impossible.
The market is expecting a 75 bp reduction in the official cash rate to 4.5% tomorrow. With the RBA’s forecast for underlying inflation for the December quarter at 4.5%, the real cash rate will effectively be zero.
posted on 01 December 2008 by skirchner in Economics, Financial Markets
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