- Alan Oster, NAB's chief economist
Despite recent market turbulence, Australia's business confidence remained strong last month. According to the NAB monthly business survey, business confidence declined slightly from +5 in November to +3 last month, with morale among Australian firms remaining resilient for several months, which supports policy makers' belief that a recovery is gaining momentum outside of the mining sector. At the same time, the business conditions index slid to +7 in December after climbing to +7 in the preceding month. The survey revealed that lower interest rates and a weaker Australian Dollar has helped to support the services sector. However, the retail and construction sectors faced a massive contraction in business conditions.
The NAB said business conditions indicated the non-mining recovery remained on track. The Reserve Bank of Australia is expected to stay on the side-lines for the near term. However, the NAB cut its global growth outlook for 2016 to 3%. The world's economy's growth continues to disappoint and remains below average as a slowdown continues across many emerging market economies. Moreover, the bank predicts the Australian Dollar to slide to 66 US cents by June 2016.
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