Why the RBA is upbeat about the Australian economy

LNG ship. Image: Australia Pacific LNG

One of the factors underpinning the RBA’s forecasts for pickup in economic growth is that commodity export volumes will lift in the coming years.

We’ve built the infrastructure, expanded operations, and now higher export volumes will follow suit, particularly for LNG.

“Over the next couple of years we expect GDP growth to be around the 3% mark,” RBA governor Philip Lowe said in an address to the A50 Australian Economic Forum a month ago.

“In both years it will be boosted by a significant pick-up in LNG production.”

This chart from Westpac goes some way to demonstrating the reason for Lowe’s optimism.

Source: Westpac

It tracks the the bank’s estimates for Australian LNG exports using high-frequency shipping data, overlaying it against export volume data reported by the ABS.

It’s clearly moving higher, providing a boost to real, volume-based GDP.

“Data for March so far suggests volumes have recovered to 4.4 million tonnes,” says Westpac. “If correct, Q1 exports will be up 30% versus the same quarter a year ago.”

It’s easy to see why the RBA is optimistic on the real GDP front, even with some signs of weakness in Australia’s domestic-orientated sectors.

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