NAB’s Oster queries RBA view
The Reserve Bank's (RBA) economic forecasts have come under question at the National Australia Bank private wealth conference, with group chief economist Alan Oster using economic data and consumer trends to suggest that the economy will be subdued and lacking momentum through this year.
Oster criticised the RBA's belief that non-mining investment must eventuate even though there is none at the moment.
"It's going to take them a while to figure out that it's not coming, if we're right," Oster said.
The economy is still at sub-trend growth, and they can't see any momentum, he said.
He also noted that businesses are not producing at capacity and are lacking confidence, and questioned why non-mining investment would increase in that sort of environment.
There was very little demand for non-mining investment, Oster said.
Consumers are still saving like it's the GFC and only spend when they have to, he said.
The domestic economy was a bit softer than a lot of people think, he warned. Domestic growth would only 2.25 per cent this year.
The only reason unemployment wasn't going through the roof was because for every job that was lost in manufacturing there are two created in health and social systems, and one replaced by a temporary job in mining, Oster said.
NAB has forecast a rate cut in June, and possibly two, he said.
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