Part 2: Economic Outlook
The Australian economy is transitioning from strong resource investment‑led growth to broader‑based drivers of economic activity. The transition is being supported by historically low interest rates, the fall in the Australian dollar and low oil prices. Employment growth has strengthened as the economy transitions to more labour‑intensive sectors such as services and has been supported by moderate wage growth. While business investment intentions currently remain subdued, conditions conducive to stronger business investment are in place.
Australia's real GDP growth has been revised down for 2015‑16 from the Budget forecast of 2¾ per cent to 2½ per cent but is forecast to strengthen to 2¾ per cent in 2016‑17. With business investment intentions in the non‑mining sectors of the economy yet to strengthen, real GDP growth is forecast to pick up more gradually than anticipated at Budget.
Nominal GDP growth is also expected to be weaker than forecast at Budget at 2¾ per cent in 2015‑16 and 4½ per cent in 2016‑17. This reflects weaker commodity prices and a moderate outlook for inflation.