Growth will stagnate in the Australian economy according to quarterly forecasts undertaken by the Melbourne Institute’s Macroeconomics team.

Commenting on the release of the Melbourne Institute Monthly Bulletin of Economic Trends, Dr Edda Claus said, “Our forecasts are on the lower side compared to others’.  We would be hard pressed to raise our growth forecasts because, at this stage, it is hard to see where robust growth could come from.”

She added, “Though a consensus seems to have emerged that monetary policy will stay unchanged for some time we remain on the look-out for inflationary pressures coming from the labour market. Wage expectations are high and unemployment expectations are low. Both suggest that the labour market will be tight and may translate into considerable wage inflation.”

• Read the February issue of the Melbourne Institute Monthly Bulletin of Economic Trends online. It presents the Macroeconomics team’s quarterly forecasts of the Australian economy.