Nomura says no matter how fast Australia's economy grew in the past, there are still plenty of reasons to be cautious about the future

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  • Australia’s Q2 GDP report will be released today.
  • The median economist forecast looks for a quarterly increase of 0.7%, leaving growth over the past year at 2.8%. Nomura is forecasting a big upside surprise.
  • Even if such a result eventuates, the bank remains cautious about the outlook for the economy in the period ahead.

Australia’s latest economic report card will arrive today with the release of Q2 GDP.

After rebounding strongly in the first three months of the year, another solid result is expected.

According to economists polled by Bloomberg, the median forecast looks for a quarterly increase in real GDP of 0.7%, leaving growth over the past year at 2.8% without revisions.

Combined with the 1% gain reported in Q1, that should leave growth over the first half of the year comfortably above trend, the level where unemployment and inflationary pressures are expected to be stable.

Such a result will also fit with recent commentary offered by the RBA.

Andrew Ticehurst, Research Analyst at Nomura, thinks the GDP will report will surprise most, forecasting another bumper rise of 1% for the quarter.

“With [all of the GDP inputs now in], our final estimate for Q2 GDP data… is 1.0% quarter-on-quarter and 3.2% year-on-year,” he says.

“We also see a modest upward revision to Q1 growth from 1.0% to 1.1%.

“If we are correct, then growth over H1 will prove notably above-trend, as alluded to [by the RBA in its September policy statement].”

While such a headline increase would do little to dissuade the view by some that Australia is a “miracle economy”, extending its run without entering a technical recession towards a 27th consecutive year, Ticehurst says there’s still reason to be cautious about what the near-term future holds.

“We believe the outlook has become more uncertain given a still-cooling housing market and declining dwelling prices, rising funding pressures and an increase in variable mortgage rates by some lenders, with more action likely on this front, and our continued caution regarding easing global growth momentum, emerging market pressures and China, which our team expects to slow further over coming months,” he says.

There are risks both at home and abroad, in other words, meaning no matter how the economy fared several months ago, what matters most is how it will cope with these headwinds in the future.

The GDP report will be released at 11.30am AEST.

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