In Australia, the main focus will be on Tuesday’s 2018-19 Federal Budget, which will be full of tax cuts, give aways and few nasties ahead of a federal election sometime in the next year.
On the data front expect the April NAB business survey (later today) to show that business conditions remain reasonably solid as does confidence. This survey is a day early because of the budget tomorrow.
The AMP’s chief Economist, Dr Shane Oliver says March retail sales (tomorrow) should show modest growth and real growth of 0.4% for the March quarter thanks to weak retail prices and; housing finance (on Friday) to remain soft despite a solid performance by housing approvals in March.
The corporate event of the week will Thursday’s AMP annual meeting, where three directors are standing for re-election. It could be tough.
In the US, look for a further lift in annual core Consumer Price Inflation to 2.2% (out Thursday). The March quarter earnings season slows with the week to be dominated by media companies – led by Disney, News Corp, 21st Century Fox and Liberty Media.
Senior trade officials from the US, Canada and Mexico are scheduled to resume talks on the North American Free Trade Agreement (Nafta) in Washington tonight, our time.
The Iran nuclear deal hits the headlines this week. President Trump has threatened to pull out of the Iran nuclear deal by May 12 unless UK, France and Germany address his criticisms of the accord. Watch oil prices.
In Europe the Bank of England meets this Thursday to discuss monetary policy – the Bank of England had been wisely tipped tor raise rates this month, but nothing will happen after a spate of weak economic reports indicating a sharp slowing in the pace of activity.
Chinese economic data for April starts flowing this week and is expected to show export growth bouncing back to around 8% year on year and import growth slowing to 13% (both on Tuesday), annual CPI inflation on Thursday should fall further to 1.9%, as well as another dip in producer price inflation (PPI) and credit growth remaining solid.
And on the Federal Budget, Dr Oliver wrote this highlighter at the weekend:
He sees the budget as a “pre-election budget made possible by a revenue windfall.”
Dr Oliver says it will be “ big improvement in the underlying budget position on the back of increased corporate tax revenue, strong employment growth and lower spending is expected to see the deficit for this financial year fall to $17bn from the $29bn projected in last year’s Budget."
“This would allow the projected return to surplus to be brought forward a year to 2019-20 but the Government is likely to “spend” much of the revenue windfall as a pre-election sweetener and leave the return to surplus in place for 2020-21.
“The key elements of this pre-election budget stimulus – which will amount to around $7-8bn a year or 0.3% of GDP – are likely to be personal tax cuts for low and middle-income earners possibly starting as early as July this year but more likely in July 2019, the dropping of the 0.5% increase in the Medicare levy, more infrastructure projects and maybe some increase in health spending.
“Financial sector regulation may also get a boost in view of the Royal Commission.
"And the Government may announce a cut to its immigration intake. Key Budget numbers for 2018-19 are expected to be: a Budget deficit of $13bn (assuming the tax cuts kick in from July 2019), real GDP growth of 3%, inflation of 2.25%, wages growth of 2.5% and unemployment of 5.5%,” Dr Oliver forecast.
