Australia is being “buffeted” by divergent trends that may present challenges to the economy this year, a leading bank economist says.
JPMorgan ?senior global economist Joseph Lupton said slowing growth in China, diminishing returns from a low Australian dollar, the declining savings rate and the impact of soft commodity prices on national income could arrest the momentum noted in last week’s national account figures, NewsNow reported.
“To some extent, I think that Australia is between a developed market and an emerging market,” he told Fairfax Media.
“You’ve had these countervailing trends, which are that in the aftermath of the global financial crisis, emerging markets were doing strongly–and Australia was benefiting from that–and developed markets were struggling.
“That’s starting to reverse at this point: emerging markets are starting to struggle more and developed markets are picking up.
“Australia’s being buffeted by these two things.”
His comments, made during a flying visit to Sydney, came after the release of national accounts that showed surprisingly robust 0.6% fourth-quarter growth in gross domestic product.
This put year-on-year growth at 3%, after an upward revision in the third quarter, from 0.9% to 1.1%. Output expanded 2.5% in 2015, compared with 2.6% in 2014.
The main sour note in the accounts came from a further decline in national income, reflecting the fall in export prices.
This depresses government revenue, company profits and employee wages, meaning the effects of broader growth are not always felt by consumers.
Economists have used this to partly explain the decline in the national savings rate, from 9.1% of GDP to 7.6%.
