Australian economy predictions for 2018

June 19, 2018

  • Australian economy predictions

In short: it’s good news! Experts are predicting that Australia’s economic growth in 2018 is set to accelerate. At the start of the year the Reserve Bank of Australia predicted a strong economic outlook for 2018, including strong growth. These Australian economy predictions have been supported by recent data released by financial institutions which show a trend in the growth rate of over 3% for the first half of the year.

The RBA’s original prediction was for GDP growth of 3.25% (which is a very solid growth rate) and financial data for the year so far supports this prediction for Australia’s economic growth in 2018.

The Australian property market is predicted to be pretty well flat this year, in good news for home buyers, though not so positive for property investors. Melbourne property growth is slowing considerably, and other capital cities are looking at flat growth rates. Sydney, experts predict, will actually see a drop in property values in some areas, though this is set to be a very small decline. The only capital with positive property market trends in 2018 is Hobart, which will see growth albeit of a low starting point compared to the other capitals.

Some experts predict that although overall the Australian property market will be stable across 2018 as a whole, there may be pockets where prices fall and rise at various points. On the other hand, Australia is seeing strong population growth which means long-term the housing market is predicted to grow or at least remain stable.

Households may also feel the pinch this year, with wage growth at record low levels, and household debt approaching record highs. This means many ordinary Australians may struggle to pay their bills and meet their financial commitments. This in turn effects how much money they spend, meaning businesses could suffer.

In terms of the share market, although the Australian share market continues to perform strongly, many experts warn that the bubble may burst at any time. The Australian share market is closely tied to the US stock exchange. In the US, they are currently enjoying one on the longest runs of a strong ‘bull market’: there it has been nine years since the last large drop (of 20% or more) in the US share market. According to experts, this means it is due to have a significant drop soon, likely sometime during 2018.

Because of the close ties between our share markets, if the US sees a drop or even a crash, Australia’s markets are likely to follow suit. However, this does not mean that the Australian market follows exactly whatever the US market does: our market is also affected by other factors. The Australian economy predictions for strong growth, solid commodity prices and close relationship with China which is also seeing strong economic growth, means that our share market is likely to continue to perform strongly, and these factors will cushion the blow dealt by any negative changes in the US share market.