01/12/2009
Feeling Positive about 2010
We see a significant recovery in economic conditions in Australia during mid to late 2010. In the past four months, the Reserve Bank has become increasingly confident regarding the Australian economy, making numerous positive statements including “the risk of serious economic contraction in Australia has now passed” and “economic conditions in Australia have been stronger than expected and measures of confidence have recovered”. The key negative factors impacting our economy now relate to the high Australian dollar and ongoing drought.
We believe that in 2010, three important factors will impact business:
- Strengthening demand;
- Economic growth in China and India;
- The continuing information and communications technology revolution.
Strengthening demand and increased business investment will result in a stronger economy and higher profits for most companies during 2010. The downside for business will be an economic environment where interest rates are rising and a labour market which is tightening.
The Reserve Bank has recently noted that “growth in China has been very strong”. China and India are potentially huge markets for Australia, due to our geographic proximity and wealth of commodities. China and India have a combined population of 2.5 billion, with both economies only in the early stages of catching up with living standards in the developed world. Our mining, resources and agricultural sectors will experience strong demand in the next year, perhaps the next decade, which should have a positive flow-on effect for the rest of the economy.
The internet and continued advancement of communications technology will become increasingly important aspect of our businesses. In the past ten years, the technological revolution has fundamentally changed the way we bank, buy houses, look for jobs and communicate with each other. These advancements will continue to extensively impact business in 2010 and beyond. Early adaptors of new technology will prosper while those slow to see the importance of the ‘technology revolution’ will continue to struggle.
Overall, 2010 should be a good year for Australia, with low unemployment and an expanding economy. There are undoubtedly risks and challenges but we are now well and truly advancing down the road of an economic recovery.
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.
Back to News and Media
Sign up online for our newsletter.
