01/08/2008

Economic Update ... Continuing to Grow

Despite international and the local share markets crumbling, our economy continues to defy the worst predictions of the economic pessimists. The Australian economy has remained surprisingly resilient during the past six months to the domestic and external shocks of higher interest rates, volatile credit markets and a slowing US economy. 

The local economy is continuing to grow but certainly at a much slower rate than over the past five years. Consumer spending has recently declined and there has been a significant fall in the growth of credit provided to households and businesses in Australia. Additionally, most recent economic surveys have indicated that consumer and business confidence has further declined during the past three months. However, the Australian economy is still on target to expand by a solid 3% to 3.5% in 2008.

We believe, in 2009, that the local economy will again continue to grow, being bolstered by demand from China and South East Asia. Industrial production has remained extremely robust in China and has increased in most other South East Asian economies in the past twelve months. Locally, the Federal Government has indicated that we will see further fiscal stimulus in the next two years, through additional spending on much needed infrastructure. Therefore, despite a weak housing market and a moderation in retail spending, we believe the Australian economy will continue to expand during the next eighteen months.

 Ross MacMillan holds a Bachelor of Commerce (Accounting, Finance and Systems) from the University of NSW, he is a member of the Institute of Chartered Accountants, member of the Securities & Derivatives Industry Association and a fellow of the Financial Services Institute of Australia.
 

Important Note: These articles have been prepared for general circulation and are circulated for general informational purposes only; these articles should not be regarded as business or investment advice. The articles represent the views of the writers and are subject to change without notice. Additionally, while every care has been taken in the preparation of the articles no representation or warranty as to accuracy or completeness of any statement is given. An individual or organisation should, before any business or investment decision is made, consider the appropriateness of the information in this document, and seek professional advice, having regard to objectives, situation and needs. This document is solely for the use of the party to whom it is provided.

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