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Economic Outlook: Sunny side up

What's ahead for Australia's economy? St George Bank's Chief Economist, Hans Kunen, is upbeat, and explained why at a recent industry seminar.

I'd like to share some of the key factors he outlined as basis for his positive outlook:

  • Low interest rates: Australia appears to have reached the bottom of the interest rate cycle and is forecast to remain fairly steady. An additional interest rate cut is possible, most likely around the middle of the year, in June.
  • Resources & infrastructure investment & projects strong: Major resource and infrastructure projects, as well as rebuilding after the floods, provide a boost to the construction industry. The combined signals indicate that "things are picking up in engineering and construction".
  • Recovery continues: The sum of all major economic factors points to a continuing recovery of the national economy.
  • Rising population: Australia is experiencing steadily increasing population that is expected to continue.
  • Income increasing: Salaries and wages are set to continue increasing overall.
  • Rising house prices: House prices appear to have bottomed out and are, in general, on the way up. This may vary from region to region and city to city but there is a general upwards trend.
  • Improved consumer sentiment: Various single factors – such as the improvement in the sharemarkets and those mentioned above – have combined to create a more positive outlook from the consumer point of view. Consumer sentiment is on the increase again and expected to continue.
  • Less global chaos: On the back of a few very volatile years there appears to be a gradual stabilisation within the world economy, on the whole. For instance, the Euro may have weakened but has not 'collapsed' as various economists anticipated.

"Housing is still a good investment in Australia", summarised Hans Kunen, bringing his economic outlook back to a property perspective.

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