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• The panel draws on the expertise of leading forecasters at 28 Australian universities, think tanks and financial institutions – among them economic modellers, former Treasury, International Monetary Fund and Reserve Bank officials, and a former member of the Reserve Bank board.
• Its forecasts paint a picture of weak economic growth, stagnant consumer spending, and a continuing per-capita recession.
• Six of the experts surveyed expect the Reserve Bank to increase rates further in the first half of the year, while 20 expect no change and three expect a cut.
• Read more:
  The 7 new graphs that show inflation falling back to earth

  Warwick McKibbin, a former member of the Reserve Bank board, said the board would push up rates twice more in the first half of the year as insurance against inflation before leaving them on hold.

Inflation to keep falling, but more gradually

• Today’s Reserve Bank board meeting will consider an inflation rate that has come down faster than it expected, diving from 7.8% to 4.1% in the space of a year.
• The newer more experimental monthly measure of inflation was just 3.4% in the year to December, only points away from the Reserve Bank’s target of 2–3%.
• Economists Chris Richardson and Saul Eslake say while inflation will keep heading down, the decline might be slowed by supply chain pressures from the conflict in the Middle East and the boost to incomes from the tax cuts due in July.

Slower wage growth, higher unemployment

• While the panel expects wages to grow faster than the consumer price index, it expects wages growth to slip from around 4% in 2023 to 3.8% in 2004 and 3.4% in 2025 as higher unemployment blunts workers’ bargaining power.
• But the panel doesn’t expect much of an increase in unemployment.
• All but two of the panel expect the unemployment rate to remain below the range of 5–6% that was typical in the decade before COVID.

Slower economic growth, per-capita recession

• The panel expects very low economic growth of just 1.7% in 2024, climbing to 2.3% in 2025.
• All but one of the forecasts are for economic growth below the present population growth rate of 2.4%, suggesting that the panel expects population growth to exceed economic growth for the second year running, extending Australia’s so-called per capita recession.
• Percy Allen and Stephen Anthony assign a 75% and 70% chance to such a recession, and Warren Hogan a 50% chance.
• Hogan said when the economic growth figures for the present quarter get released, they are likely to show Australia is in such a recession at the moment.

Weaker spending, weak investment

• Mala Raghavan of The University of Tasmania said previous gains in income, rising asset prices and accumulated savings were being overwhelmed by high inflation and rising interest rates.
• The panel expects non-mining investment to grow by only 5.1% in the year ahead, down from 15%, and mining investment to grow by 10.2%, down from 22%.
• Johnathan McMenamin from Barrenjoey said private and public investment had been responsible for the lion’s share of economic growth over the past year and was set to plateau and fade as a driver of growth.

Home prices to climb, but more slowly

• The panel expects home price growth of 4.6% in Sydney during 2024 (down from 11.4% in 2024) and 3.1% in Melbourne, down from 3.9% in 2024.
• ANZ economist Adam Boyton said decade-low building approvals and very strong population growth should keep demand for housing high, outweighing a drag on prices from high interest rates.
• While high interest rates have been restraining demand, they are likely to ease later in the year.

The Conversation’s Economic Panel

Click on economist to see full profile. Download the answers as XLS PDF
Peter Martin is economics editor of The Conversation AU.