Consumer spending is forecast to be down 8.8 per cent in 2020 while fixed investment is tipped to be down by 3.8 per cent.
After the June quarter 7 per cent contraction, Fitch believes the economy will grow a modest 0.4 per cent in the September quarter, held back by the events playing out in Victoria.
The situation is better for 2021, with Fitch tipping the economy to expand by 3.9 per cent. But it won’t be due to a strong household sector with spending in this pivotal area tipped to improve by a modest 2.8 per cent.
“Activity should benefit from a very accommodative macro policy stance, which is shoring up household income,” it said.
“The mining sector should also continue to be supported by strong Chinese demand for industrial commodities (particularly iron ore).”
Fitch also believes the Reserve Bank will have official interest rates at 0.25 per cent over the forecast horizon while continuing its yield curve control policy.
“An extension of bond purchases with longer maturity targeted within the yield curve control policy is a strong possibility in coming months,” it said.
Global growth is tipped to fall by 4.4 per cent this year before bouncing back by 5.2 per cent in 2021.
China and emerging nations are expected to be the key drivers of growth next year.
