While retailers have faced a slow start to 2018, with declining spending and demand over the March quarter, economists at Deloitte expect some “much needed relief” to come in the second half of the year.
According to the most recent Deloitte Retail Forecasts report for Q2 of 2019, real retail turnover growth is expected to slow to 1.5 per cent in 2019, before strengthening in 2020 to 2.9 per cent.
“Our outlook for 2019 is a tale of two halves, and there is some good news ahead,” Deloitte Access Economics partner David Rumbens said.
“While the first half of the year is constrained by weak income growth, the latter half will likely receive a boost as monetary and fiscal stimulus work together for the first time in over a decade.”
According to Rumbens, the Reserve Bank’s decision to lower the cash rate will put some money back in consumers’ pockets – as will the Coalition’s tax cuts.
“The post-election sugar hit of tax offsets for low and middle earners are likely to boost household incomes in the second half of 2019,” Rumbens said.
“Usually tax cuts result in a marginally higher take home pay packet, supporting a gradual and ongoing increase in consumption. The difference this time around is that the tax policy changes will be putting cold hard cash in the hands of consumers once they have lodged their returns.”
According to Deloitte, over half of all tax refunds are completed in the September quarter, while another quarter are completed in December, boding well for the coming months.
While this influx of cash could create a spike in spending, NAB chief economist Alan Oster said yesterday that he does not expect the tax cut package to make a significant impact.
“The consumer remains highly cautious with anything but spending on essentials because of ongoing slow income growth, high debt levels and possibly some concerns over falling house prices,” Oster said.
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