INDEPENDENT MARKET STUDY
A U S T R A L I A
Australian economy and outlook
The Australian economy has expanded for 24 consecutive
years without recession. Gross Domestic Product (GDP)
expanded by 0.6% in the December 2015 quarter to be
up 3.0% over the year. This was above the 10-year annual
average growth rate of 2.8% p.a. As the mining investment
boom slows down, the consumer and public sectors are
gaining healthy momentum and are supporting Australian
GDP growth.
Figure 1: Australian Real GDP Growth Forecast to 2020
The outlook is for further steady growth outcomes in the
near term. Real GDP is forecast to grow 2.6% p.a. in the
five years to 2020 (Figure 1). Growth is projected to be
supported by steady household consumption growth and
ongoing residential housing construction activity.
Population Growth
Population growth is a major underlying driver of consumption
spending and supports demand for retail goods (both traditional
and e-Commerce). Australia continues to benefit from relatively
strong population growth for a developed country.
Over the ten years from June 2005 through June 2015
Australia’s population increased by 3.6 million people, an
average growth rate of 1.6% p.a. and is expected to grow at
1.3% p.a. over the five years to 2020.
Inflation, Interest Rates and Bond Yields
Australian Consumer Price Index (CPI) inflation at 1.5%
headline in December 2015 remains below the Reserve Bank
of Australia (RBA) target band of 2.0% to 3.0% p.a. Forecasts
have inflation remaining benign at 1.9% in 2016, before
rising moderately and averaging 2.3% p.a. over the 2015-
2020 forecast period.
The RBA last cut the official interest rate by 25 basis points
to 2.00% in May 2015. In total, rates have been cut 275 basis
points since the easing cycle began in November 2011.
Recent policy decision statements have adopted a further
easing bias.
According to the RBA, the Commonwealth Government 10-
Year Bond rate averaged 2.73% in January 2016 and 2.72%
over the year to January 2016. Deloitte Access Economics
forecast the Australian Government 10-Year Bond Yield to
remain low over the next year, averaging 2.73% in 2016
(Figure 2). Bond yields are then forecast to rise gradually as
economic growth is expected to improve, resulting in tighter
monetary policy settings being adopted by the RBA, and
as global interest rates begin to rise, initially in the United
States, and eventually more widely.
Figure 2: Australian Government 10-Year Bond Yield
Source: Deloitte Access Economics Business Outlook December 2015, JLL Research
0.0%
3.0%
4.0%
5.0%
(Annual % change)
2.0%
Real GDP Change
10 Year Average (2005-2014)
Forecast 5 Year Average (2015-2020)
2008
2006
2010
2012
2009
2007
2011
2013
2015
2016
2017
2019
2018
2020
2014
2.8%
2.6%
Forecast
Source: Deloitte Access Economics Business Outlook December 2015, JLL Research
0.0%
4.0%
5.0%
6.0%
8.0%
7.0%
(Period Average)
3.0%
2.0%
1.0%
2008
2005
2006
2010
2012
2009
2007
2011
2013
2015
2016
2017
2019
2018
2020
2014
Forecast
By Jones Lang Lasalle (NSW) Pty Limited
.82
A-REIT ANNUAL REPORT
2015/2016
