Original title: jungle fires affect Australia's economic prospects, analysts downgrade Australia's GDP growth forecast for 2020
Exchange rate against US dollarContinued consolidation on Tuesday (January 14), largely ignoring the boost from a further rise in risk sentiment in the market. Intra-day data show that China's trade import and export performance in December was both better than expected.
The reason is that the negative fundamental news in Australia outweighs the positive from the external demand sector, and the market is more worried about the impact of the country's runaway forest fires on its economic fundamentals and the rise in expectations of future interest rate cuts by the RBA. The related negative sentiment completely offset the boost in external bullish sentiment when the RBA is more than half likely to cut interest rates in February.
This means that the Australian dollar is still unable to completely break through the resistance of the 30-day moving average to end the unilateral decline at the beginning of the year, and whether the fire in the country can be brought under control as soon as possible will still largely control the subsequent trend of the Australian dollar, with short-term support at last week's low of 0.6850, which will open up a wider range of downward space.
NASA said smoke from Australian forest fires would "circle the earth" for at least one year and then return to Australia, according to the BBC. Australian wildfires have been burning for months, destroying more than 2000 houses and killing 28 people, according to the BBC. According to satellite images taken by NASA, the smoke generated by the fire before and after New Year's Day has crossed the Pacific Ocean, crossed South America and "circled the earth in half a circle" by January 8. NASA said the smog was expected to "circle the earth for at least one time" and return to Australia. Experts say climate change has increased the scale and intensity of the fire; it is reported that more than 100 fires continue to burn in eastern Australia, but cooler weather and expected rain in recent days have helped to fight the fire.
Analysts cut their growth forecasts for 2020 as the worst jungle fires in history undermined already shaky consumer confidence, increased the consumer burden and offset interest rate cuts. Analysts surveyed expect Australia's GDP to grow by 1.8 per cent in 2019, down from 1.9 per cent in the previous survey and 2.7 per cent in early 2019.
Analysts expect Australian GDP growth to rise only slightly to 2.3 per cent in 2020, also lower than the 2.5 per cent growth forecast in the previous survey. Australia's GDP growth forecast for 2021 remains unchanged at 2.5 per cent, but still below the trend level of 2.75 per cent. Australia's economy grew slowly in the year to September, at 1.7%, before bushfires raged in the east and south of the country.
With years of below-average wage growth and record debt levels, consumers are already in a miser mentality and there are signs of further spending cuts during the Christmas season. The RBA's three interest rate cuts failed to boost consumption, in part because households thought loosening meant big trouble for the economy. The market is betting that the RBA will cut interest rates by another 25 basis points in the first half of the year to a record low of 0.5 per cent. The RBA will cut interest rates in the first quarter, according to the survey.
Michael Blythe, chief analyst at the Commonwealth Bank of Australia (CBA), said the negative impact of Australian jungle fires will be more lasting than other disasters such as floods. This negative impact has been exacerbated by extreme dry weather that has put pressure on most areas particularly in the agricultural sector.
The National Bank of Australia expects Australian inflation to be 1.4% in 2020, 1.5% in 2021 and 1.6% in 2022. The Commonwealth Bank of Australia believes that due to slow GDP growth in the UK and the possibility of interest rate cuts by the central bank, the dollarOr fall to the 200-day moving average at 1.2691.