A Positive Outlook for the Economy in Australia

A positive outlook for the economy in Australia is on the cards and here’s why.

On November 15th, the Australian Financial Review had a headline, to-build-buffers-against-new-uncertainty-20161115-gsprre”>“RBA’s, Phillip Lowe urges ‘buffers’ against Donald Trump uncertainty”; this was following a speech to CEDA (Committee for Economic Development of Australia). CEDA are a bipartisan, non-profit, national, independent, member based organisation providing thought leadership and policy perspectives on the economic and social issues affecting Australia.

So what was it about the RBA (Reserve Bank of Australia) Governors’ speech that caused the Australian Financial Review (AFR) to issue a warning about Donald Trump? It is a sad day when the AFR resorts to creating bad news to sell papers. Whilst, the RBA’s Governor, Dr Phil Lowe did mention buffers, at no time did he mention Donald Trump. In my view, he had a very positive outlook for Australia’s future.

Positive highlights of the speech

1. Our banks’ balance sheets have been improved, thanks to David Murray and his lnquiry that made banks issue more capital.
2. The housing sector has not given the RBA reason to worry about banks’ balance sheets, despite the frequent news stories that pedal such fear.
3. Like the IMF (International Monetary Fund), he thinks it’s okay for the Government to ease up on Budget Deficit destruction, provided they spend on infrastructure that will raise productivity and inspire business investment, i.e. as mentioned in last week blog, this is good debt.
4. Households have buffers of excess mortgage repayment equalling 17% of total home loans and are about 2.5 years ahead of what they need to be with repayments.
5. To some extent, this reduces concerns about our household debt, which is a high 185% of household disposable income.

is there anything to worry about?

It would be a worry if we had a low economic growth outlook, but Dr Lowe says we’ll be growing around our potential rate, of about 3.5%. This is very good, by world standards, and is fast enough to bring unemployment down.

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There is a positive outlook for the economy in Australia but what about, my neck of the woods, the Central Highlands in Queensland?

There has been a noticeable turn around in optimism in recent months and this has a positive, domino effect. This has occurred due to the huge increase in the price of coal and the fact that the farmers have had a great season with record production and price, especially with chickpeas.

It is gratifying to end this years’ Q & A, on Emerald 4HI, on a positive note and I take this opportunity to wish all our listeners and readers of my blog a safe and happy festive season and a great 2017.

Take advantage of our free no-obligation consultation and we will advise how you can benefit from the positive outlook for the economy in Australia, along with our many satisfied clients.

Steve Taylor

If you prefer to listen here is my radio interview on Emerald 4HI:

https://stevetaylor.com.au/wp-content/uploads/2016/12/Steve-Taylor-24th-Nov.mp3?_=1

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At the helm of Steve Taylor & Partners, Steve Taylor has been delivering expert advice and product knowledge to clients for over 30 years. Steve Taylor & Partners provide individuals, couples and families with the right strategies to create wealth and change their lives with solid bricks and mortar.

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DISCLAIMER

Steve Taylor & Partners blog is opinion and not advice. Readers should seek their own professional advice on the subject being discussed. The figures stated in this article were accurate at the time of publication. For up to date figures, please contact our office.

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