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Treasurer Jim Chalmers has delivered his Ministeral Statement on the Economy. In summary Chalmers pointed to Australia facing a more challenging fiscal outlook as key trading partner China cools and the local job market loosens

• tumbling iron ore prices and a softening labour market have hit government revenue
• leaving a “sliver” of the revenue windfalls that supported the Budget bottom line for the past two years
• Chalmers statement sets the scene for next month’s mid-year Budget update
• Chalmers said he was “confident not complacent” that the worst of the inflation storm had passed

AUD not a lot moved, there is not a lot new in Chalmer’s remarks.

This article was written by Eamonn Sheridan at www.forexlive.com.

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A note from Nomura argues that:

• Asia is better prepared for Trump’s second presidency, but a larger economic growth drag and disinflation now look more likely in 2025.

Main points:

• Higher tariffs, weaker global demand and more policy uncertainty are set to weigh on Asia’s economic growth.
• Disinflation is a bigger risk for Asia, given weaker growth, lower energy prices and the prospect of increased Chinese exports into the rest of Asia.
• While the broader economic and geopolitical impact is negative for Asia, especially for China and South Korea, we see India and Malaysia as relative beneficiaries due to ongoing supply chain shifts.

Here is the link to the full piece for an interesting read.

This article was written by Eamonn Sheridan at www.forexlive.com.

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JP Morgan US economic outlook for next year, in breif

• There are now upside risks to growth from deregulation and tax cutting and downside risks from tariffs and general policy uncertainty
• But one shouldn’t lose sight of the business cycle, which has been performing well
• We look for only a mild downshift in growth in 2025 to 2%, with a small additional rise in the unemployment rate to 4.5%
• Core PCE inflation expected to decelerate a half-point next year to 2.3%
• We look for the Fed to cut 25bps in December and another 75bps by the end of 3Q25, then stop at 3.75%
• Labor supply is set to slow over the next couple years, with breakeven payroll growth falling under 100k by 2026
• labor demand also keeps moderating, though not enough to create a recession
• Growth with be supported by solid but not speculator business productivity gains of of 1.5-2.0% per year
• We assume that tariffs on China will rise sharply but not be raised significantly elsewhere, leading to slower trade volumes and higher import prices

More of this?

This article was written by Eamonn Sheridan at www.forexlive.com.

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