CBA Chief Economist Michael Blythe takes a look at the risks & issues likely to impact the Australian economy in 2016.

We expect the economy to grow by 2¾% in 2016.  Such an outcome would be in line with our best guess on the new potential growth rate.  As a result, we expect the unemployment rate to grind lower during 2016.  Nevertheless, unemployment will remain relatively high.  And wages growth should remain modest as a result.  Contained wages growth should go hand‑in‑hand with restrained inflation outcomes.  Relative to the Australian consensus we see some upside potential on the growth front in 2016.  The unemployment rate should undershoot the consensus as a result.  Upside growth risks also mean modest upside risks to the low inflation consensus.  From a market perspective our calls have the RBA on hold and longer‑term interest rates and the AUD sitting below the consensus. 

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