Australian GDP Growth to Improve: HSBC

Killian Plastow, InvestorDaily

Australia’s economy is set to improve as growth rebalances away from the mining sector and in to housing and services, according to HSBC. While business investment has been a drag on the country’s economy, HSBC explained that a pick-up in growth in housing construction, resources and services exports and household consumption has had a positive effect on GDP growth. “The rebalancing of activity in the economy has meant that GDP growth was 3.3 per cent year-on-year in Q2 2016, which is an above-trend pace of growth for Australia,” the bank said.

This rebalancing is “now well-progressed”, HSBC said, and drag from mining investment “should gradually lessen from here”. HSBC added that national income growth looks ready for a pick-up, as commodity prices appear to have passed their lowest point. “A key result of the rebalancing of growth from mining to the housing and services sectors has been slower growth in wages, which has also weighed on domestic inflation.

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