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Ten reasons to be cautiously optimistic….
The global economic crisis (GFC) has 2. Unemployment is far less here in March. These figures have also been
wreaked havoc with Australia’s economy. than in other western countries. assisted by the Government release of
We’ve seen GDP fall, unemployment rise, Unemployment stood at 5.7% in May. stimulus cash payments, which were
investments decline and a sombre mood Compared to 9.4% in the US and 7.2% aimed at encouraging people to spend
take hold in the market. in the UK. Australia’s unemployment and help stave off a recession.
is relatively low and rising far
There’s no guarantee that the worst is less rapidly. 7. Our banks are better regulated. We
over yet, however several indictors are had very little sub prime lending in
suggesting the rate of decline may be 3. Interest rates are on hold. The Reserve Australia compared to the US and this
slowing and our economy may be Bank left the cash rate at 3% in June has placed Australian banks as some
starting to fight back. for the second month in a row. RBA of the best capitalised in the world.
Governor Glen Stevens argued that
Looking at the financial news in evidence of growing stability in the 8. As of mid June 2009, the Australian
Australia, the general tone is ‘cautiously global economy and the stimulus sharemarket has rallied 30% off its
optimistic’. Some experts are predicting measures by governments around the low of 3111on 6th March 2009, with
we’ve seen the worst of this recession and world “is helping to contain the banking and resources sectors
that recovery is imminent or may have downturn, and should support an particularly strong.
even commenced. Others are predicting a eventual recovery”.
long slow recovery. Which outcome is 9. Exports rose by 2.7% in the March
correct will depend in part on how and 4. In the event further stimulus is quarter. Combined with a 7% fall in
when the rest of the developed world, required to bring Australia out of imports, Australia’s current account
(particularly the US) resolves their the downturn, the government and deficit narrowed to $4.6 billion from
significant debt and imbalance issues. Reserve Bank have greater fiscal and $6.5 billion in the fourth quarter
monetary flexibility than the rest of the of 2008.
Taking a “glass half full” perspective, developed world.
we’ve highlighted ten reasons why 10. Much of this gain in exports is due to
Australia may be better placed than our 5. Home sales and prices are still rising. China’s spending. Chinese banks are
global counterparts. ABS figures show that home sales spending their government stimulus
rose 0.5% in April and building loans on purchasing raw materials
1. Gross Domestic Product (GDP) has approvals jumped 5.1%. The current as opposed to US bonds. Happily,
grown. Figures released by the high demand for mortgages is another Australian copper and other metals are
Australian Bureau of Statistics (ABS) good sign. Low interest rates and the number one on China’s shopping list.
in early June revealed that GDP for Government’s First Home Owners
the March quarter grew 0.4% Grant seem to be having the
from the previous three months, desired effect.
confounding common expectations
of another decline following the 6. Retail sales went up by 0.3% in April
November quarter drop. By technical with consumers spending $19.35
definition, this means that Australia is billion according to the ABS. That
not in a recession. follows a 2.2% increase in retail sales