While Australia’s economy continues to tick along – with GDP growth of 2.9% in 2017 and an improved performance of 3.2% forecast for 2018 – the country faces a cocktail of headwinds including rising household debt and a slowdown in employment growth.
Australians have also been warned to prepare for a major housing downturn after prices fell across the country for the 12th consecutive month in September. Analysts project that prices could drop as much as 15% by 2020.
Wage growth is subdued and is not expected to improve much in 2019. As a result, consumers will continue to tighten their purse strings – not good news for retailers.
Some analysts argue that Australia is at risk following the trade war between the US and China, with KPMG believing it could cost the economy at least AU$36bn (£20bn) over the next decade.
Australia saw a new Prime Minister come to power this autumn, with Australian Treasurer Scott Morrison winning the liberal party leadership challenge after Malcolm Turnbull lost the support of his party members and was ousted.
The retail outlook
The retail market remains under pressure thanks to mounting headwinds of weak wage growth, rising costs including energy charges and a declining housing market.
Still, this has not deterred overseas retailers from expanding there. In the past year French chain Decathlon opened its first store in the country, while Amazon launched there in late 2017. However, it will face stiff competition from Alibaba after the Chinese ecommerce giant opened headquarters in Melbourne in 2017.