Australia’s economy forecasted to
encounter a recession this 2009 has proven itself to be
quite resilient. A combination of government stimulus
packages as well as the influence of the economic growth of
China has kept the Australian economy from going down into
the feared recession.
Business and economic analysts
are highlighting positive key points, showing the
world that Australia’s economy is not headed for a
First unemployment rates are estimated to be in the
Well below the Federal governments
first estimates for the 2009 forecast of 6%. This
also shows that the rate of ascent is slow to take
place leading experts to consider the projected 8%
Consumer level of confidence begins to rise as debt
level fall and savings return to early 1990’s
bracket. Consumer monitoring register several boosts
demonstrating an improved sentiment from the
consumer retail level.
In the past 9 months, the span of residential
construction and individuals building their homes
reach a 61 percentile. Housing affordability has
also improved with record low interest rates as well
as reasonable mortgage extensions made by local
banks. The annual Australia's economy inflation rate
has declined to a 7 year low. Annual inflation of
2.4% is normal and it is calculated that despite
current price rises in many spending groups,
inflation will continue to stabilize in the RBA's
marked range of 2-3% and maintain this for another
year. Definite signs of a upturn are emerging in the
Australian economy, but confidence is still well
within the baseline as confidence has been sternly
Predictions of extreme recession and
even depression of the Australian economy have been
overestimated. Recovery is viewed to continue but it
is foreseen as slow and steady.
An optimistic 'V' shaped
recovery is not expected but a more extended "U" curve is
likely to be seen. Economic experts do not necessarily see
this as a negative however.
Ultimately the strength in
consumers and businesses consolidating their positions and
finances will not be returning quickly to the extremes seen
in their financial exuberance experienced in the last cycle.
In the past quarter, reports in the
international sharemarkets, including those of the
Australian economy, have rallied from their early March
lows. Countries such as the US, UK and European economies
persist to contract, the rate of decline is relatively
This may indicate a bottoming is near.
China and Australia economic reports
indicate a step into the recovery phase. The present period
of consolidation is now necessary for sharemarkets to shift
to the subsequent level.
The catalyst may well be a better
than anticipated report season which has already been seen
in the US.
The Australian economy represents a
minute fraction of the global economy, but it should inspire
assurance in local investors of the potential recovery in
our investment markets.