craig james chief economist, commsec, july 2011
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The Australian & Global Economy. ediscoveryconsulting.blogspot.com. Craig James Chief Economist, CommSec, July 2011. Important information. - PowerPoint PPT PresentationTRANSCRIPT
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Craig JamesChief Economist, CommSec, July 2011
The Australian & Global Economy
ediscoveryconsulting.blogspot.com
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Important information
This presentation has been prepared without taking account of the
objectives, financial situation or needs of any particular individual.
Before acting on the information in this seminar, you should consider its
appropriateness to your circumstances and, if necessary, seek
appropriate professional advice.
Commonwealth Securities Limited ABN 60 067 254 399
AFSL 238814 (CommSec) is a wholly owned but non-guaranteed
subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124
and a Participant of the ASX Group.
Examples used in this presentation are for illustrative purposes only.
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The Big Picture
Global economy growing…Emerging nations lead the way…
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Global economySo What?Exchange rates, trade, sharemarket, interest rates
Drivers of world economy - Contribution to growth 2011
China 0.81%
United States 0.74%
India 0.18%
Japan 0.14%
Newly Industrialised Asia* 0.13%
Germany 0.13%
ASEAN 5 # 0.12%
Brazil 0.11%
Russia 0.10%
United Kingdom 0.08%
France 0.07%
Canada 0.05%
Other countries 1.70%
World 4.30%
Source: IMF & CommSec* Newly industrialised Asia – Hong Kong, Taiwan, Singapore and South Korea# ASEAN 5 – Indonesia, Malaysia, Thailand, Philippines and Vietnam
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Ascent of China
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China awakes
Land of 1.3 billion people industrialises…Major resource demands…
www.thenewmans.id.au
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Australian focus is trade
Three-quarters of exports to Asia…But driven by China and India…
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China industrialises
China is our number 1 trading partner…Huge gains, potential to grow further…
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Demand for Aussie Raw Materials
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Commodity price perspectives
Commodity prices hit 100-year low in 2002….and then came China…Australia is a key winner
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Mining boom
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Not just miningSo What?Interest rates, investment, economic policy
Drivers of the Australian economy 2007 – 2010, % contribution to the change in GDP
Mining 17.4%
Professional, scientific and technical services 11.9%
Construction 11.6%
Financial and insurance services 10.8%
Agriculture, forestry and fishing 10.8%
Healthcare and social assistance 9.7%
Education and training 5.1%
Public administration and safety 5.1%
Transport, postal and warehousing 3.8%
Wholesale trade 3.5%Source: ABS & CommSec
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Big Picture Economy slides due to floods…but underlying position is soft…
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Conservative Consumers
Consumers remain cautious……and more inclined to save
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Housing Building approvals flat……and house prices fall for four months
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Tight job market Unemployment remains low……wages up, especially in the mining sector
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Interest rates
Cash rate still below average……but what matters are lending rates…
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Inflation
Headline inflation boosted by petrol, fruit & veg……but underlying rate held down by discounting
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Reserve Bank views
Underlying inflation contained……but RBA expects stronger growth ahead
RBA Output & Inflation ForecastsDec 13Jun 13Dec 12Jun 12Dec 11Jun 11Dec 10
-4.004.003.753.753.503.50GDP - Nov 10-4.004.003.754.253.252.75GDP - Feb 11
3.753.753.754.254.252.502.70GDP - May 11
-3.003.002.752.752.502.50Underlying CPI - Nov 10-3.003.002.752.752.252.25Underlying CPI - Feb 11
3.253.003.003.003.002.502.25Underlying CPI - May 11
Source: Reserve Bank, CommSec
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Aussie dollar
High Aussie dollar keeping inflation down……as well as keeping a cap on growth…
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Outlook & Issues
European debt
US economic recovery
China expansion
Carbon tax
Mining Tax
Structural change
‘New conservatism’
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CommSec forecasts
ForecastsEconomic growth 2.40% in 2010/11 4.10% in 2011/12
Inflation 3.10% in 2010/11 3.10% in 2011/12
Unemployment 4.50-4.75%, end 2011 4.25-4.50%, end 2012
Cash rate 5.00-5.25%, end 2011 5.50-5.75%, end 2012
Sharemarket (Australian)
5,000 points, end 2011 5,500 points, end 2012
Australian dollar US104c in Dec 2011 US95c in December 2012
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www.despair.com