Two months ago, the NAB and several other institutions published sales indexes that foreshadowed gloomy days for retails. However, one new study has now published a fairly different take after factoring the monetary easing policy currently being pushed by the Reserve Bank.
The Retail Forecasts of Deloitte Access Economics agrees with other reports only in terms of the slow turnover growth of retail during Q2 2019 (its own numbers indicated a drop from 2.2 per cent last year to 1.5 per cent this year). But unlike many previous reports, it actually expects growth to bounce back at 2.9 per cent before the year’s end.
David Rumbens, the Retail Forecasts’ principal author and Deloitte partner, said that their outlook is a ‘tale of two halves’. He agrees that stagnant wages in Australia’s current economy have indeed negatively impacted consumer spending habits (and dealt quite a blow to retail in turn). However, the same forces that are causing this downturn are now prompting the Reserve Bank to implement strong measures to turn things around.
For now, those measures include a new monetary easing plan as well as tax offsets in the hopes of stimulating the economy. Putting those in effect will mean putting more cash in the hands of consumers and improving retail activity (and eventually, sales figures).
There are some, on the other hand, who think that putting these same measures into effect is a caveat that optimists could be overlooking.
“The retail sector needs some good news,” says Phil Chapman, director of retail lease consultancy Lease1, “However, these positive projections are based on the government getting their tax reforms through Parliament quickly.”
It has been about three years since the RBA had previously considered monetary easing and many business and economic thought leaders are debating if the stimulation will be too little, too late. But if Deloitte is placing its bets on the RBA’s success with Parliament, then the second half of 2019 may not be so bad for retailers after all.
