Bloomberg has named senior economists from Westpac, the ANZ Group, RBC and UBS as the most accurate forecasters in Australia this year.
Westpac chief economist Bill Evans topped the list, based on Bloomberg’s assessment of economists’ predictions of key economic indicators such as growth, inflation, and employment.
ANZ chief economist Warren Hogan was ranked second in Australia, while Royal Bank of Canada’ head of A/NZ economics Su-Lin Ong and UBS chief economist Scott Haslem tied for third place.
Here’s who they are and what they’re predicting:
Bill Evans, Westpac
Evans attended the University of Sydney and London School of Economics, and has previously worked as research manager at the RBA, treasurer at the Commonwealth Bank and director and head of financial markets at Schroders Australia. He joined Westpac in 1991.
He says Australia’s housing market is strong – so much so that it’s discouraging the RBA from further dropping the cash rate from the current record low of 2.5%.
But with prospects for the labour market and world economy “uncertain”, Evans says upcoming economic indicators will prompt the RBA to further stimulate the economy by dropping interest rates further.
From his latest weekly update on Friday: “The Reserve Bank does acknowledge that the economy is in need of further stimulus. However its preferred policy approach is through the AUD.
“With uncertainty around whether it is indeed overvalued; the vagaries of policies in other central banks and the terms of trade; and the risks associated with intervention, it is my view that interest rates represent a much more certain and less risky option. In time we expect that the Bank will come to a similar conclusion.”
Warren Hogan, ANZ
Hogan was appointed the ANZ Group’s chief economist since 2010, after three years as the bank. He was previously chief economist and head of interest rate product research at Credit Suisse, and has also worked at Westpac and NSW Treasury Corporation.
He says Australia’s economy is “in the process of successfully making the transition from the mining investment boom to more normal cyclical economic conditions”, and the recovery will be led by housing.
Here’s what he told Business Insider this week: “We are seeing good turnover in the property market and before too long this will broaden to residential construction activity picking. This will create jobs and consumer demand for household goods. We also expect to see consumer caution ease back over the next year resulting in stronger consumer spending.
“We also expect to see the unemployment rate stabilise in the next six months at or just below 6%. This should also support confidence and demand in the economy. We are watching employment and residential construction indicators as well as offshore economic conditions.
“On this basis we expect the RBA to hold the cash rate steady before increasing rates in 2015.”
Scott Haslem, UBS
Haslem has an honours degree in economics and master of economics degree from the Australian National University. He was a senior economist in the RBA’s economic activity and forecasting division before joining UBS in 1998.
As of last Friday, Haslem’s team at UBS was forecasting real Australian GDP to come in at 2.7% in the 2013/14 financial year – just over the Labor government’s August forecast of 2.5%.
According to UBS forecasts, headline CPI will rise 2.4% in the next two years, slightly up from 2.3% in 2012/13, while unemployment will come in at 5.5% in mid-2014, down from 5.8% this June.
Haslem said on Friday that Australian economic growth would “remain moderate” in the near term, with GDP recovering to a more trend-like 3.5% in the 2014-15 financial year, as the global backdrop improves.
“This suggests the RBA will hold the cash rate steady at a record low 2.5% until 2015, before commencing a modest tightening cycle of +75bp in 2015 to 3.25%,” UBS reported.
Su-Lin Ong, RBC
Ong joined RBC in 1998 after working as a fixed income economist at Hambros Bank and an economic advisor at the Department of Prime Minister and Cabinet and Department of Industrial Relations. She is currently managing director and head of AU/NZ economics and fixed income strategy, RBC’s Capital Markets.
RBC’s latest quarterly global economic report has Australian real GDP growth and CPI pegged at 2.3% and 2.3% this calendar year, and 2.6% and 3.0% in 2014 respectively.
As of September, Ong expected the RBA to cut the cash rate further to 2.25% this year, and keep it at that level throughout 2014.