Australia | Investment recovery driving a stronger outlook
Our June forecasts contained a substantial upward revision to growth in 2021 and 2022. We now forecast growth of 5.3% in 2021, followed by 3.2% in 2022. In the near term, the change in the outlook has been driven by the better-than-expected Q1 GDP print, and the more supportive stance of fiscal policy presented in the May Budget.
Very accommodative policy settings are gaining traction and spurring private sector activity. In particular, we are forecasting a sharp rebound in dwelling and business investment, which will boost activity in the near term.
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- With health outcomes remaining favourable and the labour market recovery ahead of schedule, forecasters have generally revised their 2021 forecasts higher since late 2020.
- Public demand has been a large contributor to domestic demand growth in recent years. But it will wane as a driver of growth moving forward.
- Income support and curtailed spending drove a surge in the savings rate in 2020. As with earlier episodes, the savings rate will unwind only gradually.
Finland’s growth forecast cut amid weak confidence and soaring inflation
We have lowered our 2022 GDP growth forecast for Finland to 1.5% from 1.7% last month, as weakening confidence further dampens the outlook. We expect inflation to peak higher with a greater passthrough to core prices, squeezing real incomes and denting consumption. Russia has accounted for almost 10% of Finland's goods trade, among the highest in Europe.Find Out More
Why we see eurozone inflation slowing sharply next year
We have revised our 2022 eurozone inflation forecasts sharply higher, to 6.0%, since the start of the Ukraine war, as energy and food prices began to soar and new supply bottlenecks emerged. That said, we still see inflation decelerating sharply to 1.3% in 2023, putting us below consensus. While we recognise significant risks to our views, inflation should slow to below 2% in H2 2023.Find Out More