It is now a few years that I am worried about Australian political mismanagement.
Now unfortunately the issue are starting to come to focus to the wider population and the media.
In the developed economy we are trailing both US and UK. Actually the decline has started in 2009 and it has been a fault of the Government:
-misallocation of resources
– high Australian Dollar (also this is a fault of the Government/RBA: if all our major partners are waging a currency war, you cannot just stay idle and watch).
In 2Q13 Australian GDP surprised on the downside (+0.6% against a consensus +0.8%) So an annual decrease from 2.4%pa to 2.3%pa with an increase of population of 1.8%yoy.
RBA estimates for next year are 2.5%pa, but I am pretty sure they will prove wrong and we will be around 2%. Why?
– Domestic Demand Recovery is absent, apart the September /October retail optimism
– Even the RBA says the mining activities and Capex will decrease
-Public sector deleveraging under the Coalition start to have effect on other part of the economy
– Fiscal squeeze due to the inherited growing budget deficit
– In face of this residential property boom cannot pick up the slack (actually some softness it staring to appear.
What does it mean for the share market? A most probable further rate cut before March 2014. Some cyclical and consumer retail stocks that ran a lot will face an harder truth.
Again, diversification overseas is essential.
investorpolitico 