FINWIRES · TerminalLIVE
FINWIRES

Australia's Economy Expected to Grow 0.5% in Q1; Wage Hike Has No Material Impact on Inflation Outlook, ANZ Says

By

Australia's gross domestic product is expected to grow 0.5% in the first quarter from the previous quarter and expand 2.6% from a year earlier, but the growth should decelerate over the remainder of 2026 as momentum has cooled following the Middle East conflict, ANZ said in a Tuesday report.

The bank said the Australian Fair Work Commission's (FWC) 4.75% increase to modern award wages is the largest hike since 2023, but doesn't materially change the outlook for wages, inflation, or the key cash rate.

"Increases in award wages do not typically flow through fully to the wage price index, but if they did, we estimate this decision would make an around 0.5 percentage point contribution to annual WPI growth," the bank said.

It expects the softer economic activity outlook and a rise in the jobless rate to help offset the impact of the FWC's decision with regard to the aggregate wages bill.

Related Articles

International

Indonesia's Trade Surplus Shrinks to $89 Million in April; Exports Jump 22%

Indonesia's trade surplus fell sharply to $89.1 million in April from $3.32 billion in the previous month, according to government data published Tuesday.The consensus estimate was for a $1.50 billion surplus, according to Investing.com.Exports jumped 22% to $25.30 billion, recovering from the 3.1% drop in March. Imports surged 22.5% to $25.21 billion, significantly faster than the 1.51% increase in March.

$^JKSE
International

Market Chatter: India to Seek Relief from US for Tariffs that May Arise from Trade Investigations

India is likely to ask the US for relief from any tariffs resulting from the US trade investigations, according to a Bloomberg report on Tuesday, quoting unnamed officials.As per the report, the matter is likely to be raised when negotiators from India and the US trade team, led by chief negotiator Brendan Lynch, meet this week to finalize an interim trade deal.Earlier this year, the US Trade Representative launched investigations under Section 301 of the Trade Act into countries, including India, over issues such as forced labor and excess production capacity. These may attract penalty tariffs if found guilty.The report said India has denied the allegations and asked the US to end the investigations. It is seeking that the US works out the matter within the framework of ongoing bilateral trade negotiations and not through unilateral means.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

$^BSE$^NSEI
International

RBA's Ian Harper Expresses Concerns Over Rise in Inflation Expectations

Reserve Bank of Australia (RBA) Board Member Ian Harper said on Tuesday that any possible risk of long-term inflation expectations becoming unanchored requires "strong action," according to his speech on Tuesday.Harper said that Australia was seeing renewed inflation pressures even before the oil shock caused by the Middle East conflict.The RBA increased the official cash rate by 25 basis points to 4.35% at its May meeting."Higher interest rates are expected to slow the economy and lower the risk that inflation becomes entrenched," said Harper.

$^AXJO