澳大利亚西太平洋银行-2018年投资展望（英文）-20171214-40页

Summary of Westpac Market Outlook: December 2017 & January 2018

Core Content

This report provides an analysis of the Australian and global economic outlook for the end of 2017 and early 2018, highlighting key trends, risks, and policy implications. It outlines the performance of the Australian economy, the impact of the US dollar and interest rate differentials on the Australian dollar (AUD), and the broader implications for financial markets and global growth.

Main Points

Australia

• GDP Growth: Real GDP growth in Australia was forecasted at 2.6% for 2017, up from 2.4% in 2016, but downgraded due to weaker consumer spending. For 2018, growth is expected to moderate to 2.5%.
• Consumer Spending: Consumer spending has stalled, particularly in Q3 2017, with growth slowing to 1.9% for 2017 and expected to rise to 2.3% in 2018. The household sector faces pressure from weak wage growth and high debt levels.
• Home Building Activity: Home building activity peaked in 2016 and has since declined, expected to subtract 0.3ppts from GDP growth in 2017 and 0.4ppts in 2018, with a likely stabilization in 2020.
• Interest Rates: The Reserve Bank of Australia (RBA) kept the cash rate unchanged at 1.5%, indicating caution. The RBA is expected to maintain the rate on hold through 2018 and 2019.
• Australian Dollar (AUD): The AUD has weakened against the USD and is expected to fall further to around USD 0.70 by the end of 2018. The interest rate differential between Australia and the US is projected to turn negative, with the RBA rate 38bps below the US Federal Funds rate by end-2018.
• Bond Yields: The spread between Australian and US 10-year bond yields has narrowed significantly, with the differential expected to be negative by 2018. The RBA's bond yield is projected to remain stable, while the US rate is expected to rise.
• Public Investment: Public demand is a key growth driver, with a strong rebound in infrastructure investment. Public construction is expected to grow by +3.4% in 2018, with a 7% increase in investment.
• Trade and Commodity Prices: Exports are expected to grow by 5.5% in both 2017 and 2018, driven by strong demand from Asia. Commodity prices are expected to remain robust due to strong global demand and supply constraints, with iron ore benefiting from tighter environmental controls in China and coal prices rising due to weak Australian exports.

Global Outlook

• Global Economy: The global economy had its best year since the 2008-09 crisis, with strong growth and improved financial markets, despite political instability and a continued Fed tightening cycle.
• United States: The US economy faces a tension between employment growth and wage inflation. The Fed is expected to raise rates twice in 2018, rather than three times, as markets are pricing in a more cautious outlook.
• China: China's economy is expected to grow steadily, but risks remain due to its complex and opaque financial system. A potential unintended reduction in credit supply is a key concern.
• Europe: The Euro Area is expected to continue strong growth in 2018, but the expansion remains fragile and reliant on accommodative monetary policy. The ECB is expected to maintain its support.
• New Zealand: New Zealand's economy is set for a major shift with a new government and the fading of previous growth drivers. The GDP forecast for 2018 has been downgraded, but improved for 2019 and 2020.
• Global FX Markets: The US dollar has shown limited strength despite Fed tightening, with global FX markets pricing in a continued depreciation of the AUD. The USD is expected to rise by 6% by end-2018.

Key Risks and Concerns

• Australia: Continued weak consumer spending, high household debt, and a potential slowdown in business investment.
• Global: Structural challenges in China, uncertain political climate in the US and UK, and the fragility of self-sustaining growth in Europe and Japan.
• Financial Markets: Low volatility and market complacency, with the potential for a more uneven economic landscape in 2018.

Summary Forecast Tables

Hot Topics

1. 2017: Year in Review – A year marked by political turbulence, but with a relatively stable economic and market environment. The global economy saw its best growth since the 2008 crisis, and financial markets were characterized by low volatility.
2. Domestic Outlook for Australia – The domestic economy is expected to grow at a moderate pace in 2018, with consumer spending and home building activity remaining weak. Structural changes in China and global growth are key factors.
3. Retail Sector and Amazon – The launch of Amazon in Australia is seen as a major challenge for traditional retailers, adding pressure on margins and prices.
4. Manufacturing and Infrastructure – The Australian Chamber-Westpac Survey indicates a moderation in manufacturing momentum, but public infrastructure investment is expected to remain strong.
5. Commodity Prices – Commodity prices are expected to remain robust in 2018, driven by strong global demand and supply constraints. China's environmental policies and the US's oil production are key factors.

Conclusion

The Australian economy is expected to grow at a moderate pace in 2018, with continued pressure on the household sector and a weaker AUD. The global economy is showing signs of improvement, but structural and political risks remain. The Fed's tightening cycle is expected to continue, while other central banks maintain accommodative policies. Financial markets are expected to remain cautious, with the potential for more uneven growth in 2018.