Business Monitor International


Australia Business Forecast Report

Published 19 November 2014

  • 51 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Australia Business Forecast Report

Core Views

  • Economic activity in Australia shows signs of rebounding from its low in Q114, even as the pull-back in mining investment remains underway. The strong performance by Australian exports lifted Q114 real GDP growth to 1.1% quarter-on-quarter (q-o-q) in real and seasonally-adjusted terms, and we have upgraded our 2014 growth forecast to 2.3% on the back of these figures. However, our growth forecast remains below consensus, given a dimming outlook for iron ore and coal. Meanwhile, other sectors are unable to pick-up the slack as narrowing profit margins dampen businesses' appetite to invest and hire.

  • We believe that the housing market remains precarious, as housing affordability continues to edge to new lows. Our downbeat outlook for the Australian job market, which leads us to forecast unemployment to edge up to 6.5% by the end-2014, would inevitably weigh on the demand for credit and by extension, house prices. Indeed, major Australian banks have expressed caution towards the domestic housing market.

  • The Liberal-National coalition's popularity has been on the decline since winning parliamentary elections in September 2013. In addition, the government struggles to secure the support it needs in the Federal Senate where it does not hold a majority, and as such likely to dilute any reform efforts.

  • With economic weakness to become more evident in Q414 and credit growth waning, we forecast the Reserve Bank of Australia (RBA) cut its by 25 basis points to bring the cash rate to 2.25% by end-2014. We expect easing house prices to support the RBA's rate cut decision. This should weaken the Australian dollar in aid of local manufacturers, as the unit has remained quite strong on the back of market expectations of possible interest rate hikes. 

Major Forecast Changes

  • Given strong export performance in Q114, we have upgraded our growth forecast, expecting 2014 real GDP growth to come in at 2.3%. While further export growth could present upside...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Our Take On The Budget Debate
8
TABLE: POLITICAL OVERVIEW
8
Long-Term Political Outlook
9
Three Key Challenges: Population, Climate Change, China
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Growth Downtrend Remains Intact
14
Table: Economic Activity
14
Fiscal Policy
15
Fiscal Tide Turning
15
Table: Fiscal Policy
15
Monetary Policy
17
Long Pause Ahead For The RBA
17
Table: Monetary Policy
17
FX Forecast
19
AUD: Bounce Likely, But More Downside Thereafter
19
TABLE: Exchange Rate
19
TABLE: BMI CURRENCY FORECAST
20
Chapter 3: 10-Year Forecast
23
The Australian Economy To 2023
23
Exports And Immigration Key For Long-term Growth
23
Table: Long-Term Macroeconomic Forecasts
23
Chapter 4: Operational Risk
27
Operational Risk Index
27
Operational Risk
28
Table: Developed States - Labour Market Risk
28
Table: Developed States - Logistics Risk
31
Table: Developed States - Crime And Security Risks
33
Table: Developed States - Trade And Investment Risk
36
Chapter 5: Key Sectors
39
Infrastructure
39
Table:Construction & Infrastructure Industry Data
40
Table: Construction And Infrastructure Industry Data
41
Oil & Gas
43
Table: Oil Production (2012-2017)
44
Table: Oil Production (2018-2023)
45
Table: Gas Production (2012-2017)
46
Table: Gas Production (2018-2023)
46
Other Key Sectors
47
table : Phar ma Sect or Key Indicat ors
47
table: Telecoms Sector Key Indicators
47
table: Defence & Security Sector Key Indicators
47
table: Food & Drink Sector Key Indicators
48
table: Autos Sector Key Indicators
48
table : Freight Key Indicat ors
48
Chapter 6: BMI Global Assumptions
49
Global Outlook
49
Reality Check: Uncertainty Reigns
49
Table: Global Assumptions
49
Table : Devel oped States , Real GDP Growth, %
50
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
50
Table : Emerging Markets , Real GDP Growth , %
51

The Australia Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Australia and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Australia's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Australia's economic and industry growth through end-2018.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Australia's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Australia, including currency volatility, the commodity price boom and protectionist policies.

The Australia Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Australia economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for Australia through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Australia Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2018 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Australia and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Australia, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Australia over the next 5-years?

BMI's Australia country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Australia Market - Political Strengths, Weaknesses, Opportunities and Threats facing Australia.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Australia's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Australia's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Australia, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Australia's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Australia will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Australia's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express