Australia
Annual CPI 1.3%
Annual GDP Growth 2.3%
Quarterly GDP Growth 0.3%
Unemployment rate 5.1%
GDP Growth and inflation have both fallen since the start of this year. The main cause is a slowdown in building activity due to the property market slump. Economists are calling for the RBA to reduce interest rates or the government to undertake tax cuts or other stimulus. Weakness in the Australian Dollar has helped to improve our trade balance and so far has not led to any increase in inflation or interest rates.
USA
Annual CPI 2.0%
Annual GDP Growth 3.2%
Quarterly GDP Growth 0.8%
Unemployment rate 3.6%
The US economy is experiencing boom time conditions however this may be impacted by the trade dispute with China and other policitical issues. The US dollar is very strong which hurts the trade balance but it does help to keep inflation low.
China
Annual CPI 2.5%
Annual GDP Growth 6.4%
Quarterly GDP Growth 1.6%
Unemployment rate 4.4%
China’s growth is slowing as a result of the trade dispute but this is not yet leading to reduced prices for Iron Ore so has yet to impact Australia. Steel production remains high and the supply of Iron Ore from Brazil has been interrupted by industrial accidents.
Market Outlook
The Australian sharemarket experienced a 1.5% bump on the Monday after the Federal Election and has been flat ever since. The annual return is approximately 10% which is very good considering the 15% drop experienced from September to December.
International shares (unhedged) and Listed Real Estate have both comfortably outperformed the Australian Sharemarket over the last 12 months. Global bonds have also delivered good performance with a return of 6.7%.
There is optimism regarding the Residential Property market but it’s yet to be seen if predicted interest rate cuts and increases in borrowing limits will occur or have an impact on prices. It is possible that this optimism will subside if buyers decide that they do not wish to be more heavily indebted.
There is a feeling that the US trade dispute with China will not be resolved quickly and that will eventually lead to lower ecomomic growth and asset price falls. This feeling is not widespread so markets remain stable.