Global Economic Outlook – September 2022 Australia: Mounting headwinds set to weigh on growth The Australian economy has Rising inflation, a tight labor As the full impact of the recent rate proven resilient to recent market and strong growth rises flows into the economy in the headwinds, achieving solid are forcing the RBA to hike months ahead, growth and inflation growth in H1 2022. rates aggressively. are expected to moderate in 2023. Households resilient despite headwinds Table 8: KPMG forecasts for Australia 2021 2022 2023 Supply chain disruptions, elevated commodity prices, and GDP 4.9 4.2 2.2 rising interest rates are all weighing on economic activity to some extent. But households have thus far shaken off these Inflation 2.9 6.3 5.2 pressures and are continuing to lead solid GDP growth. Unemployment rate 5.1 3.8 4.4 Helped by the release of pent-up demand from 2021’s Delta lockdown, consumption rose by 2.2% quarter-on-quarter Source: Australian Bureau of Statistics, KPMG analysis. in both Q1 and Q2, well above trend growth. The increase Note: Average % change on previous calendar year except for unemployment rate, which is average annual rate. in spending is being led by a rebound in services, with households continuing to normalize their spending patterns. Despite the lockdowns and real estate downturn in China, which are disrupting construction activity and demand for iron ore, strong demand for Australian energy exports has helped lift the trade balance to new highs. While some of that reflects elevated commodity prices, export volumes have increased too. Indeed, net trade (the difference between export and import volumes) made a 1 percentage point contribution to GDP growth in Q2. Notwithstanding the robust growth in disposable income, which increased by 1% on the quarter in Q2, households have partly funded additional consumption in recent quarters by reducing their saving rate. The household saving rate is now 8.7%, still a little above its pre-Covid level, but at its lowest level in two years. © 2022 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 28