Modified domestic demand, a measure of domestic spending which excludes investment in intangibles and aircraft leasing, grew by 4.7 per cent in 2016. Looking ahead, the outlook is favourable, although external uncertainty persists. The main impetus to growth will continue to come from domestic demand, driven by continuing gains in employment and incomes.
Reflecting this, prospects for consumption and investment remain positive and modified domestic demand is forecast to grow by 4.5 per cent this year and by 4.0 per cent next year. Although the pace of employment growth is projected to moderate, unemployment is set to fall towards 5 per cent, with growth in compensation likely to average around 3 per cent.