2010 Economic Outlook

Australia has defied the rest of the developed world and is looking at its 19th consecutive year of positive economic growth. Most economists are predicting that the economy will continue to grow this year and will fare much better than other economies.

Gross Domestic Production (GDP) will be boosted by the planned Government infrastructure spending and continued export demand for our raw materials from the likes of China and the other major growth partner; India. Plus, the housing stimulus issued for first home buyers should also assist in improving the GDP numbers, both on the construction front and also the follow on effect of spending on household consumables.

Consumer sentiment is still holding up despite the last three rate rises (and the higher increases by some lenders above the RBA cash rate increase). Sentiment is an important measure of consumer’s planned forward behaviour so it needs to be watched closely (as it is by the RBA) to ensure we don’t overdo the tightening cash cycle and stop the current momentum. The strong Aussie Dollar will keep the price of our ‘consumer’ imports lower, enticing more consumer spending on items, that they don’t really need, but just want!

On the negative side of the overall outlook is the impact that major economies have on us and the overall global growth picture. The European economies are still very much lost in the woods and the US is looking to almost having emerged from them, but unless they have further directions, they might still struggle to find their way home in 2010.

On the property front; commentators are expecting continued growth in values as demand is outstripping supply, but growth as strong as what we have seen in ’09 is unsustainable, so steady growth is more desirable, but opportunities for outperforming results are still very achievable