The Australian economy is slowing, with tight monetary policy and falling real incomes curbing demand and earlier supply constraints still affecting the realisation of investment projects.
Region: Australia
Recession risk has become a hot topic in Australia with GDP growth slowing to just 0.2% q/q in Q1, and a sharp interest rate hiking cycle putting the clamps on growth in a bid to curb inflation.
Oxford Economics Australia was engaged by the Construction, Forestry, Maritime, Mining And Energy Union (CFMEU) to explore the economic case for investing in Australia’s social and affordable housing, potentially funded by revenue from a super profit tax.
Related Services Australia Macro Service Defunct In-depth insights and analysis of key domestic and global trends, enabling clients to make better strategic decisions, manage risks and take advantage of newly-developing opportunities in a fast-changing economic environment. Find Out More → Global Macro Strategy Service Global insight and opportunity at your fingertips. Find Out More →
Australia’s rental market tightened considerably in 2022 with rents growing 13.4% y/y nationally. Momentum has continued in 2023, with an increased volume of tenants competing for a relatively static level of supply, contributing to historically low vacancy rates. Moreover, higher interest rates have significantly lifted the mortgage costs for landlords, who are keen to balance their cash flow through higher rental incomings.
The recent blame put on rising company profits as a key driver of consumer price inflation in Australia is overstated. We are not wholly convinced by claims of a causal relationship between profits and inflation as has been widely reported.
