Two prominent UTAS economists have been included in the panel of 26 experts from industry, the university and finance sectors in the Fairfax Media ‘Scope’ economic survey on the outlook for the 2017-18 financial year. The ‘Scope’ survey is one of the most respected in Australia and is now in its 40th year.
This year’s survey included forecasts from both Professor Mardi Dungey form the University’s Economics and Finance program and Saul Eslake, the inaugural Vice Chancellor’s fellow at the University of Tasmania. The University of Tasmania is the only university with two representatives on the Panel.
Both Dungey and Eslake predict that Australia’s modest economic growth of between 2.5 and 2.75 percent will continue over the next 12 months with unemployment likely to remain in the 5.5 to 5.6 percent range.
Dungey is slightly more optimistic in terms of the outlook for the Chinese economy over the 12 months expecting 6.9 percent growth in China. She also anticipates an 8 percent increase in home prices in the key Melbourne and Sydney markets over the next 12 months although, like most economists, regards house prices as a policy problem:
‘In my opinion house prices are still far too high and are unlikely to improve until there is proper policy reform in this area, and the longer it goes on the bigger the potential economic ramifications,’ Dungey says.
Eslake is more cautious and expects Chinese growth of 6.1 percent in the coming year and little movement in home prices.
Both economists believe the outlook for Australian consumer spending, share market and the federal budget will remain weak and that the biggest risk to the Australian economy is a sharp decline in house prices or a financial crisis in China.
Despite these risks, both Dungey and Eslake believe that it is very unlikely there will be a recession in Australia in the next 12 months. Dungey puts the probability of a recession at 5% while Eslake believes there is a 20% chance.
The full Scope Economic Survey was published in The Age and Sydney Morning Herald on Saturday July 1st.