Powered by MOMENTUM MEDIA
subscribe to our newsletter

Outlook for Australian economy ‘relatively pessimistic’

Although sentiment towards Australia’s economic outlook has improved over recent weeks, it will be short lived, according to one economist.

AllianceBernstein senior economist Guy Bruten said while that sentiment has helped to buoy the Australian dollar, the likelihood of further monetary easing and weakness in the currency still stands.

“Our relatively pessimistic view of Australia’s outlook has been based around two central tenets,” Mr Bruten said.

“First, the downswing in the commodity super cycle will continue to cast a very long shadow, and the adjustment to lower commodity prices is a multi-year affair.

“Second, the so-called ‘rebalancing’ of growth from the mining sector to the non-mining sector will be a rocky path.

Advertisement
Advertisement

“On the first [tenet], the bounce in the iron ore price from below US$50 ($62) per tonne to US$60 ($75) might make for good headlines, but it doesn’t amount to much in the context of the downtrend that has brought this price down from US$180 ($226),” he said.

“And it certainly is not going to spark the same sort of powerful transmission mechanism that was central to the commodity boom phase.”

Speaking about the second tenet, Mr Bruten noted that while employment growth has firmed and the unemployment rate is no longer “shooting higher”, it is largely a reflection of the housing construction upswing.

“Once that upswing starts to top out, the lopsided nature of the ‘rebalancing’ will quickly become apparent,” he said.

Mr Bruten added there is still little sign of enthusiasm for business expansion in non-mining sectors, and a further rise in unemployment seems inevitable.

PROMOTED CONTENT


“For the record, that’s what we expect, and we see no reason to change our big-picture view,” he concluded.

Outlook for Australian economy ‘relatively pessimistic’
mortgagebusiness

Latest News

The Queensland government and lenders have begun offering financial assistance to those affected by Cyclone Niran in Queensland. ...

The CEO of Aussie Home Loans, James Symond, has forecast that broker market share will hit 70 per cent in the next five years, as more consu...

The technology company has launched a new fund designed to invest in technology scale-ups that are aiming for exponential growth. ...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: How the broking industry has evolved - and what's next for Aussie

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.