MNI: Australia Q4 Final GDP Forecasts Getting Downgraded

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By Sophia Rodrigues

     SYDNEY (MNI) - While net export and public demand data published Tuesday

surprised to the upside and posed upside risk to Q4 GDP, other data published

earlier surprised to the downside, leading economists to downgrade their final

GDP forecasts.

     It is likely MNI final Q4 GDP forecast would come at 0.4% q/q and +2.4%

compared with earlier median forecast at +0.5% q/q and +2.5% y/y.

     The most significant downgrade came from ANZ economists who now expect Q4

GDP to grow 0.4% q/q and 2.4% y/y, down from their previous forecast for +0.7%

and +2.7% respectively. 

     "The main new pieces of information since our preliminary forecast last

week are significantly weaker profits, wages and inventories and slightly

stronger government spending and net exports," ANZ economists wrote in a note.

     UBS economists lowered their forecast to +0.4% q/q and +2.3% y/y from +0.5%

and +2.4% respectively.  Commonwealth Bank economists now expect 0.4% q/q

growth, taking y/y to +2.2%. This compares with their previous forecast for

+0.5% and +2.3% y/y.

     Westpac economist Andrew Hanlan has also lowered his forecast to +0.4% q/q

and +2.4% y/y from +0.5% and +2.5%, based on downside surprises on inventories

and profits. 

     Macquarie economist Justin Fabo has cut his forecast to +0.4% q/q from

+0.5%. According to Fabo, household consumption growth would have to surprise

noticeably to the upside of his 0.7% q/q estimate for GDP to print above his

forecast.

     Meanwhile RBC Capital have retained their forecast at +0.6% q/q and JP

Morgan have maintained at +0.5% q/q. Others are still finalizing their forecast.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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