Australia economy to slow on wilting home prices, spending
GDP poll data
* GDP to grow 2.2 pct in 2019, 2.6 pct in 2020 and 2.5 pct
* CPI inflation seen 1.9 pct in 2019, 2.2 pct 2020, 2.1 pct
By Wayne Cole
SYDNEY, April 12 (Reuters) - Analysts have again cut
forecasts for Australian economic growth following a deeply
disappointing end to last year when weakness in consumption and
slumping house prices overwhelmed strength in the labour market.
Economists polled by Reuters forecast Australia's A$1.9
trillion ($1.4 trillion) annual gross domestic product (GDP)
would expand 2.2 percent in 2019, down from a prediction of 2.7
percent in the previous poll.
Growth was seen picking up to 2.6 percent in 2020, though
that would still be short of the 2.75 percent rate considered
"Housing and the consumer remain at the epicentre of the
domestic slowdown. Developments on both fronts continue to point
to the 2018 drag carrying into 2019," said Westpac senior
economist Matthew Hassan.
"We expect growth to remain at a subdued 2.2 percent pace
throughout 2019 and 2020."
The slowdown has fuelled speculation the Reserve Bank of
Australia (RBA) would have to cut interest rates from already
record lows to shore up activity.
Just this week, RBA Deputy Governor Guy Debelle acknowledged
economic output had disappointed but argued the continued
strength of employment might presage an upturn.
Australia's conservative government has also chipped in some
fiscal stimulus for the second half of this year with a budget
full of tax breaks and infrastructure spending.
The government faces an election on May 18 and is trailing
badly in opinion polls.
"A disposable income boost would alleviate some of the
strains on household budgets and reduce the downside risks to
consumer spending," said CBA chief economist Michael Blythe.
He estimated planned tax cuts would have the same economic
impact as two quarter-point cuts in interest rates.
"The lift in transport infrastructure spending will help
support demand in the short term, and lift incomes and
productivity over the longer haul," he added.
There is plenty of scope for stimulus as inflation remains
well-contained, having run below the RBA's 2-3 percent target
band for two whole years.
The latest poll showed analysts expected inflation of just
1.9 percent for this year, rising marginally to 2.2 percent in
(For other stories from the Reuters global economic poll:
($1 = 1.3914 Australian dollars)
(Polling by Khushboo Mittal; Editing by Richard Borsuk)
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