Westpac write "the arithmetic of our Q4...>

AUSTRALIA: Westpac write "the arithmetic of our Q4 GDP forecast is: domestic

demand +0.4%; inventories flat; & net exports -0.2ppts. The partial indicators

suggest that the econ lost considerable momentum over the H218, centred on

housing & the consumer. The export performance over H218 was also disappointing,

with volumes down 0.1% in Q3 & down a further 0.7% in Q4, dented by the impacts

of the drought & by supply disruptions to resources. Gov't spending remains an

area of strength, adding about 0.4ppts to activity in Q4. The national income

picture remains robust, with the terms of trade up a further 3.2% in Q4, to be

6% higher over the year. This reflects higher commodity prices, which is

boosting mining profits & flowing through to higher tax revenue, supporting

stronger government spending. Private domestic demand, on our figures, grew by a

soft 0.1% in the quarter. Key uncertainties: the consumer & the drought - with a

lack of partials around consumer spending on services and on farm inventories.

The drought in NSW & surrounding areas is likely to have its biggest impact in

Q4 & Q1. Revisions to history, which were sizeable in Q2 (to the upside) &

sizeable in Q3 (to the downside) are another risk."