CHARTS: Why Goldman Sachs Thinks Australia's Recovery Will Lag Behind The Rest Of The World

You might want to read this article with an adult beverage by your side.

Goldman Sachs has released a rather bearish take on the domestic economy over the course of 2014 in a 50-page outlook for 2014 under the title “Australia, the odd one out”.

At the heart of the forecast for just 2.3% growth is the fact that the mining cliff will be steeper than the market and the budget forecasts now expect, and as a consequence employment will be more subdued than expected, household incomes more restrained, government spending pared back further and even buoyant house prices won’t be able to assuage Australian household saving patterns given all of the above.

Even with all of the above Goldman Sachs still think that the risks are to the downside for growth in 2014.

The report says stocks will still rally thanks to a lower currency and the lift in global markets, but this is one of the most bearish outlooks we’ve seen on the economy for some time and its worth taking a deep dive into some of the charts.

Goldman thinks that the government and corporate sectors will continue to restrain spending

The Government’s budget position is deteriorating – but they don’t know it

The capex cliff is much bigger than the market and the government expect

Non-mining investment is going to struggle to offset the mining investment cliff

Goldman can’t get their bottom up Capex forecasts close to their base line forecasts meaning a big risk of disappointment for the market

Housing investment – construction – is going to peak mid-2014 and then face its own cliff

House prices will continue to rise until investors arbitrage away the pick up to risk free investments

Goldman is bearish on job prospects and thinks it could be too optimistic on consumption

Thankfully loose financial conditions are an offset to all the economic bearishness

And thank goodness they are because non-mining growth remains weak

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