Australia RBA on hold, growth likely to improve

In Australia, growth is expected to still improve over the next couple of years. 

Lower interest rates are boosting housing construction, where the biggest boom since the 1990s is under way, and consumer spending via the wealth effect, says Barclays. 

Non-mining exports are also doing better due to the lower exchange rate. 

Non-mining capex has disappointed, recently unwinding earlier modest gains, although a recovery is still expected, given firms are both hiring again and borrowing more.

The RBA is seen on hold for an extended period, with the risk of a cut in H2 15, given the AUD remains overvalued and RBA concern over the capex outlook. 

The key hurdle to a cut is the strength of house prices, where the RBA Governor has said some parts of the Sydney market are "crazy". The risks around strong prices have increased and tougher macroprudential measures are likely, added Barclays.