A third possible combination, and the most favourable one for Australia, would be a firming world economy and easing in domestic pressures, resulting in a more balanced growth outcome for the Australian economy.
But the combination that would be most damaging to the Australian economy would be if the household sector were to continue putting itself into a more exposed position at the rate it has over the past few years, while at the same time a further weakening of the world economy was starting to feed through to activity and incomes.