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The global economy has demonstrated resilience amidst the complexities of post-pandemic monetary policy tightening and prevailing geopolitical strife impacting international commerce. This tenacity is evident in the persistent nature of disinflation across many regions. Central banks, to sustain economic expansion and employment progress, are cautiously easing monetary policies before fully anchoring inflation expectations.
Australian overview
The Australian economy staggered into 2024, edging close to recession with just 0.1 percent growth over the quarter.
The Australian economy grew by a meagre 0.1 percent over the first quarter of 2024 and just 1.1 percent over the previous 12 months.
Household consumption has grown by 0.4 percent during the quarter, slightly higher than what occurred in the December quarter 2023.
Labour productivity, measured as GDP per hour worked, flatlined over the quarter and through the year as hours worked grew in line with GDP.
Global landscape
In some advanced economies, central banks have eased their policy amid slow growth. However, core services price inflation has remained sticky, causing the disinflation progress to stall.
Inflation has dropped substantially in many advanced economies, but it remained above most central banks’ targets.
The impact of monetary tightening and conflict factors means the world economy is unlikely to return to pre-pandemic economic growth trends in the near term.
Since the costs of servicing debt have increased due to higher interest rates, the fiscal position of many governments in advanced economies have been under pressure.
Summary forecast
*values at end of period
KPMG forecasts of key macroeconomic indicators
Indicator
Jun-23
Dec-23
Jun-24
Dec-24
Jun-25
Dec-25
Jun-26
GDP (Real)
3.1%
2.0%
1.4%
1.4%
2.0%
2.4%
2.2%
Inflation*
6.2%
4.0%
3.8%
3.3%
3.0%
2.7%
2.8%
Unemployment*
3.6%
3.7%
4.2%
4.3%
4.5%
4.6%
4.7%
AUD/USD*
0.66
0.65
0.67
0.69
0.70
0.71
0.73
Full details about the Australian economic conditions and forecasts can be found in KPMG's Australian Economic and Outlook: Q2 2024.
The global economy has proven resilient to the post-pandemic monetary policy tightening cycle, whilst the Australian economy
Australian economy
Australia is a highly developed country with a mixed economy. As of 2023, Australia was the 13th-largest national economy by nominal GDP (gross domestic product), the 19th-largest by PPP-adjusted GDP, and was the 21st-largest goods exporter and 24th-largest goods importer.
https://en.wikipedia.org › wiki › Economy_of_Australia
From late 2024, growth is expected to pick up gradually as inflation declines and the pressures on household incomes ease. Conditions in the labour market are expected to ease further to be broadly consistent with full employment in the next couple of years.
We expect GDP growth to be around mid-1% levels for the remainder of 2024. Unemployment will rise slowly but steadily over next two years from 4.2% now to 4.7%. by mid-2026. Wages growth still high but has peaked and will start to soften.
As it did in Q1, US Growth outperformed all other asset classes in Q2, advancing 8.3% in the quarter and 20.7% through the first six months of 2024. Emerging Markets, well, emerged in Q2, posting a 5.1% increase, while the S&P 500 trailed closely behind with a 4.3% return.
Deloitte Access Economics is expecting economic growth of just 1.0% in calendar year 2024, and growth of 1.7% when measured over the 12 months to June 2025. “The outlook across Australia's states and territories for 2024-25 remains varied,” Smith said.
The forecasts are conditioned on a path for the cash rate broadly in line with expectations derived from surveys of professional economists and financial market pricing; the cash rate is assumed to remain around its current level of 4.35 per cent until the middle of 2024 before declining to around 3.2 per cent by the ...
Trade policy restrictions. Global trade and investment patterns are shifting. ...
Vulnerability calls for operational resilience. Conflict escalation is now the norm, as historical collective security arrangements have been disrupted by a lack of global leadership. ...
Out of the world's 62 major economies in Euromonitor International's Macro Model, five emerging Asian countries are expected to have the highest real GDP growth rates in 2024: India, the Philippines, Vietnam, Indonesia and China.
Global growth is projected to be in line with the April 2024 World Economic Outlook (WEO) forecast, at 3.2 percent in 2024 and 3.3 percent in 2025. Services inflation is holding up progress on disinflation, which is complicating monetary policy normalization.
Real gross domestic product (GDP) increased at an annual rate of 3.0 percent in the second quarter of 2024, according to the "second" estimate. In the first quarter, real GDP increased 1.4 percent.
The latest Federal Reserve economic projections suggest that growth will rebound to an annual rate of 2.1% in 2024, but accelerating growth may prove difficult unless the Fed can meaningfully cut interest rates.
Over the next two years it expects: GDP growth to slow in the short term - falling from 1.5% to 1.3% in Jun 2024 before gradually improving throughout 2024, and lifting to be at 2.3% by the end of 2025. Household consumption and public demand to be weak in 2024 and fairly weak in 2025.
The board has given little indication as to when interest rates will be slashed, and could lift the cash rate again if deemed necessary to combat inflation. However, the majority of economists expect interest rates to remain on hold until late 2024 or early 2025.
It is then expected to gradually rise to 4.3% by June 2026. Headline inflation will gradually decline from 4.1% to 3.8% in 2024 and will continue easing towards the RBA's target band of 2-3% by the end of 2025.
A strong rise in unemployment — typically associated with a recession — is not foreseen. Key forecasts from the RBA out to December 2024 include: GDP growth of 1.7% (revised up from 1.6% in May). Unemployment rate of 4.3% (It's currently 4.1%).
Government spending is forecasted to rise 2.5%. Given that the US economy is expected to outperform many other global economies in the short term, we forecast imports to increase 3.1% on average in 2024, while exports are predicted to rise at a slower pace of 2.4%.
According to Gartner, IT spending in Australia is expected to exceed $133 billion in 2024, which is a substantial increase of 7.8% on the previous year (Figure A). This will be driven most significantly by demand in software, including cloud services, which will increase by 12.8%.
Gross Domestic Product (Second Estimate), Corporate Profits (Preliminary Estimate), Second Quarter 2024. Real gross domestic product (GDP) increased at an annual rate of 3.0 percent in the second quarter of 2024, according to the "second" estimate. In the first quarter, real GDP increased 1.4 percent.
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