The Australian Economy in 2018-19: Convergence in Economic Activity across Australia

Abstract

Economic activity in Australia continued to improve in 2017–2018 with growth spreading across the mainland state economies. Labour market conditions in Australia improved markedly in 2017–2018 while the inflation rate was steady around the lower end of the Reserve Bank of Australia's 2–3 per cent target band. Real wage growth was weak and is likely to remain weak in 2018–2019, putting downward pressure on household consumption. Output growth in 2018–2019 is likely to be solid with prospects of the Chinese economy and trade tensions between China and the United States posing the greatest downside risk to the Australian economy.