The likelihood of a significant slowdown in the economy in 2019 and 2020 has increased markedly, with the domestic and global symptoms increasingly evident. Financial markets in the US, Europe and Japan are now pricing in falls in government bond yields, and are even signalling a high probability of a federal funds rate cut by year end. Australia will almost surely have to follow these global interest rate declines. Australia’s exports are and will continue to be affected by the slowdown in the Chinese economy, caused by the tariff war and concerns about debt sustainability there. The Chinese government is implementing stimulus measures, but these will need time to succeed. In Australia, fragility in the household sector continues as a result of (excessive) property price downside risks and sluggish wages. In the looming Federal election, there is a notable risk that some policy promises being made might aggravate the contractionary phase. A technical recession will be avoided in Australia if monetary, fiscal and prudential policies are appropriately calibrated in timely anticipation. Cuts in the cash rate within the next 6 to 12 months are therefore recommended with high probability.