Craig James – the Australian economy – where 2 now?
|Craig James – CBA Commsec’s Economist Presented at the CBA Innovation Forum for SME’s on Monday 17 June 2013. A passionate speaker, with a sense of humour! |
The state of play
- Business is currently quiet, and people are waiting for the election.
- Why the wait ?– the reality is that the government is run by bureaucrat’s, and financial decisions (interest rates etc) by the reserve bank.
- Massive growth going to come from India and China – we are well placed.
- Its not all about mining… services, education, tourism, health and infrastructure will continue to drive the economy.
Why are we glum?
- Bad perceived Political Leadership
- We are going through “stuff” – changing from internet and mobile – changing way we shop – retailers are changing the way we are buying
- High $ and Australia being expensive compared to rest of world – people are going overseas on holidays – tourism has been suffering
- People have not been lending/ borrowing as much – banking will possibly not be as profitable as in the past
In Australia we are doing ok
We are one of 11 countries with a AAA rating
State of our State Economies
Strength of states compared by 8 indicators including retail/infrastructure/ Mining/agriculture
- Mining – WA/NT – growth
- Manufacturing/Finance/ Services – ACT NSW Vic – maintaining
- Agriculture – SA and Tasmania – going backwards
What about NSW?
- NSW growing faster than in past 12 years
- Unemployment different in different parts
- Inner West 3.5
- Northwest 6%
- Centrals West 6%
Asset Classes in Australia
Home process are doing ok. Sydney and WA increasing by 4% against an average of 2%
- Volume deceasing
- USA growing
- A$ profits increasing
- Returns matter
- Fully franked dividends – bode well for increase in shareemarket
- People and funds are sitting on a lot of cash , waiting for things to stabilize
- Interest rates low
- A$ – now 95c – expected to go to 85c
- Aussie economy positioned well for growth on a number of levels
- Confidence in economy will change from negative to positive (perception)
- Agriculture – prime position to take place with
- Growth will come from building our infrastructure
- Increase in Services – growth of tourism and services – with a view to increased exports
- Growth of China and India – (on our doorstep) see Hans Rosling’s video on (a brilliant video of the rise of China and India). http://bsivc.blogspot.com.au/2013/06/hans-rowling-rise-of-india-and-chinas.html
- USA is coming off low base of the GFC – Ben Bernancke looking to stop the growth – will possibly increase interest rates, USA$ will increase –
Economy 2- 3%
Inflation 2- 3%
Unemployment 5- 6%
Res Property 2- 3%
A$ 92 – 95c
Once the election is out of the road – nothing will be holding us back….. bottom line – we are bullish!!