Get 40% Off
🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Australia’s Recession Probability Eases to 35% Amid Policy Pause

Published 04/18/2023, 09:49 PM
Updated 04/18/2023, 10:09 PM
&copy Bloomberg. Visitors gather outside the Sydney Opera House during New Year's Eve celebrations in Sydney, Australia, on Friday, Dec. 31, 2021. Australia's most populous state reported a 73% surge in new Covid-19 cases on Friday, an unwelcome spike that is casting a cloud on New Year festivities as authorities urge residents to still party on. Photographer: Brent Lewin/Bloomberg

(Bloomberg) -- Australia’s chances of sliding into a recession have declined, according to a Bloomberg survey, as the Reserve Bank’s decision to pause an 11-month tightening cycle helps improve the economic outlook. 

The median estimate for a slump is 35%, down from 40% last month, the poll of 17 economists released Wednesday showed. Among respondents, AMP (OTC:AMLTF) Capital Markets and Commonwealth Bank of Australia (OTC:CMWAY) predicted a 35% chance. 

At the upper end of the spectrum, Nomura Holdings (NYSE:NMR) Inc., Barrenjoey Markets Pty Ltd. and Credit Suisse Group AG put the risk at 60%. Westpac Banking (NYSE:WBK) Corp, ANZ Group Holdings Ltd. and Goldman Sachs Group Inc (NYSE:GS). didn’t participate. 

The RBA kept borrowing costs unchanged this month after 10 consecutive hikes that lifted the cash rate to 3.6% from 0.1% last May. It’s trying to engineer a soft landing in the A$2.2 trillion ($1.5 trillion) economy by moving more cautiously in tackling inflation than some of its global counterparts.

Australia’s go-slow approach is aiding the local housing market, which is showing signs of stabilizing from persistent declines since early 2022. Consumer sentiment also picked up in April after the RBA’s pause, with financial markets pricing that Australia is all but done with rate hikes. 

The Bloomberg survey showed economists expect one more increase for a terminal rate of 3.85%.

Australia is likely to avoid recession “thanks to strong business investment, Chinese reopening and provided the RBA soon stops hiking,” AMP’s Shane Oliver said, referring to his base case. “Economic growth will still slow to a crawl this year though.”

A recession is defined locally as two consecutive quarters of declining gross domestic product.

©2023 Bloomberg L.P.


Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.