Inflation, interest rates set to fall in second half of the year, top lender forecasts
Weakened household consumption means the economy will slow in 2024, according to CBA’s economic outlook
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Australia is likely to remain in the current per capita recession until the second half of the year, with the “distinct possibility” of a quarterly contraction in economic activity, according to the Commonwealth Bank’s 2024 economic outlook released yesterday. Growth in our gross domestic product (GDP) is likely to be below trend despite continuing strong population growth this year.
CBA forecasts annual inflation to fall to 3 percent by the end of the year, with unemployment to increase from 3.9 percent today to 4.5 percent. This will enable the Reserve Bank to commence interest rate cuts from September, with CBA expecting a total reduction of 75basis points (bps) in 2024 and a further 75 bps in the first half of 2025. CBA does not expect any rate rises beforehand.
“At the heart of our forecast for below-trend growth is continued weakness in household consumption,” said Gareth Aird, CBA’s head of Australian economics. “Real household consumption was just 0.4 percent per year in Q3 23. Against the backdrop of approximately 2.5 percent population growth there has been a big contraction in the volume of spend per person.”
Mr Aird said the compounding forces of weak real wages growth, considerably higher mortgage repayments and the impact of bracket creep on tax liabilities will all weigh on spending in the first half of 2024. “There is no circuit breaker on the horizon in the short run to boost consumer demand. As such, we expect household consumption per capita will continue to contract over coming quarters. And there is a very real risk that total household consumption also declines.”
CBA expects home values in Australia’s capital cities to lift by 5 percent over 2024. CoreLogic data shows a 9.3 percent increase in 2023, largely due to supply constraints in key markets such as Sydney. CBA senior economist Belinda Allen said the imbalance between demand, driven by elevated population growth, and low supply was set to continue this year.
“Many of the same factors that drove prices higher are set to be in place in 2024, albeit with less intensity,” Ms Allen explained. “However we expect affordability constraints and rising advertised supply to put a handbrake on home price growth over the first half or so of 2024.”
The property market is likely to go through “a distinct period of moderation” in the first half, including small monthly falls in Sydney and Melbourne. Ms Allen said Australia’s two biggest cities are forecast to be weaker than the smaller capitals over the first half, but rate cuts from September will spur price growth everywhere. Overall, CBA is tipping home values to rise by 2 percent in Melbourne, 3 percent in Sydney, 8 percent in Brisbane and 9 percent in Adelaide and Perth.
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Over the next five years, the David and Lucile Packard Foundation will be committing US$480 million to an initiative dedicated to ocean conservation.
The foundation made the announcement on April 17 during the closing ceremony of the ninth Our Ocean Conference, held in Athens, Greece.
“Ocean science and conservation are core to the Packard Foundation’s DNA,” wrote Meg Caldwell, interim vice president of environment and science, in an email. “The next phase of the Packard Foundation’s commitment to ocean health, the 10-year (2023-33) Ocean Initiative, aims to protect and restore ocean ecosystems for people and nature, now and in the future.”
The support from the funding will be focused in four countries, Chile, China, the U.S., and Indonesia, which were selected because of their “biological significance, human dependence on ocean ecosystems, and opportunities to affect positive changes,” Caldwell says.
The foundation’s ocean initiative will specifically address three primary threats: climate change, unsustainable overfishing, and habitat loss. These issues not only harm ocean ecosystems, but also the countless people who rely on the ocean for “their livelihoods, nutrition, and cultural heritage, disproportionately impacting Indigenous peoples and coastal communities,” Caldwell says.
Caldwell emphasises the need to include these groups of people in the conversations and actions regarding ocean conservation.
“Weak governance and seafood supply chains that put profit ahead of people compound these threats, allowing human rights abuses and inequities to persist,” she says.
The foundation plans to address these threats by funding work within three systems: civil society, to strengthen “the engagement of ocean-reliant communities” to create more inclusive solutions; seafood supply chains, to end illegal fishing, overfishing, and human rights abuses; and governance, to enact reform that will protect both the ocean and the reliant communities.
The Packard Foundation is also a part of the Ocean Resilience and Climate Alliance, which is a philanthropic initiative working to address the climate crisis and its damage to the ocean. ORCA’s mission is “to provide a surge of more than US$250 million dollars in grants over four years to catalyze work across a handful of immediate ocean-climate priorities,” according to their website.
This stylish family home combines a classic palette and finishes with a flexible floorplan
Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.
