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What is New

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Oliver's Insights - Five things you need to know about the Australian economy

Shane Oliver, Head of Investment Strategy and Chief Economist.

 

The attached note looks at the outlook for the Australian economy. The key points are as follows:

  • The Australian economy grew solidly over the last year.
  • While recession remains very unlikely, the combination of a slowing housing cycle, constraints on consumer spending and still subdued business investment will likely see growth slow going forward to around 2.5-3%.
  • As a result, spare capacity is likely to remain significant, keeping wages growth and inflation low.
  • We don't expect the RBA to start raising rates until late 2020 at the earliest and the risk remains significant that the next move could be a cut.

 

 

 

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Oliver's Insights - Trumponomics and investment markets

Shane Oliver, Head of Investment Strategy and Chief Economist.

The attached note looks at the risks for investors from President Trump's approach and policies. The key points are as follows:

  • So far President Trump has been positive for share markets but this year the focus is increasingly shifting to populist policies with greater risk for investors.
  • The key risks to keep an eye on in this regard relate to trade conflict and the expanding US budget deficit, although the latter is more a risk for when the US economy next turns down.
  • However, the best approach for investors in relation to Trump is to turn down the noise given the often contradictory and confusing news flow he generates.
 

 

 

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Oliver's Insights - The 2018-19 Australian Budget – saving a windfall with the hope of (decent) tax cuts to come

Shane Oliver, Head of Investment Strategy and Chief Economist.

The attached note looks at the 2018-19 Budget. The key points are as follows:

 

  • The 2018-19 contains a small welcome boost to households and keeps the budget on track for a surplus.
  • The main risk is that the revenue boost seen this year is not sustained & the budget continues to have relatively optimistic assumptions regarding revenue growth.
  • The impact on the RBA and shares is likely minimal.

 

 

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The Australian housing market starting to cool (in parts)


Shane Oliver, Head of Investment Strategy and Chief Economist.

Key points are as follows:
 

Australian housing remains overvalued and this has gone hand in hand with 

high household debt. Against this, supply has been constrained and there has 
not been a deterioration in lending standards.

The hot Sydney and Melbourne property markets are showing signs of cooling
  as APRA measures bite. Expect price falls of around 5-10% around 2017.

Property investors need to be careful at this point in the property cycle as 
medium term returns are likely to be constrained.



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