Asset Allocation Strategy
The Australian Economy: Room to Grow
Mon 15th March, 2021

The Australian economy is well placed to accelerate this year, albeit the rebound may not be as spectacular as in some of the deeply depressed economies overseas.

The high domestic savings ratio provides plenty of consumer firepower. We expect a rebound in services spending over the coming year to drive strong growth in total consumer spending. This services recovery will assist the labour market as we move through the year. With policy so accommodative, overheating is a long term risk. Still it is likely to be felt first in asset markets (particularly housing) rather than in the real economy, given substantial labour market slack.

The RBA has a difficult balancing act, but its mindset has clearly shifted to pursuing full employment by facilitating a sustained period of strong growth. A strongly growing economy and a near-zero cash rate will likely be Australia’s unusual macro backdrop for some time

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Written by

David Cassidy , Head of Investment Strategy

David is one of Australia’s leading investment strategists.

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