Releasing the Monetary Policy Review (MPR), the central bank said domestic growth has stalled due to political and policy uncertainty that has depressed household and business confidence.
“The forecast indicates a feeble recovery over the next two years but even in 2019, expected growth barely exceeds 1.5%,” said the bank.
The Reserve Bank had previously stated that it sees growth this year coming in at 0.6%.
The bank’s MPR further stated that confidence indicators have been below long term averages since late 2015.
“[Indicators] are currently about as low as they were during the global financial crisis. In these circumstances, investment has contracted and household consumption growth has slowed to a crawl.”
The review, which is published twice a year, also noted that while the growth forecast has deteriorated over the course of the year, the outlook for consumer prices has improved.
“Inflation returned to within the target range in the second quarter of 2017, as forecast, and the extent of the deceleration has been somewhat better than first expected. The previous MPR published in April 2017, anticipated inflation at 5.8% for the second quarter in fact, inflation averaged 5.3%,” said the bank.
The central bank targets inflation within a target range of 3% to 6%.