This month’s Watch report provides an update on the Australian markets. As 2015 drew to a close, Australia registered a historic run of 23 consecutive years of positive GDP growth. However, its economy began slowing notably in 2013 as mining investment peaked and started to decline; this problem is compounded by the low prices for exported commodities. Consumer and business confi dence has been generally weak and most especially in those states and cities more heavily dependent on the commodity sectors. The Reserve Bank of Australia has cut cash policy rates multiple times in the past two years to boost growth. The current cash policy rate is at a record low of 2%, yet there is still room for further reductions, given that this is still a fairly high rate by current OECD economy standards and infl ation is well contained. The AUD has depreciated against the USD by approximately 35% since May 2013, which should boost exports and local industries that are more reliant on a more competitive AUD. Economic growth for the next two years is forecasted to be below the long-term average (LTA); the EIU forecasts GDP growth of 2.4% in 2015 and 2.6% in 2016, against the 15Y LTA of 3.0%. Sydney and Melbourne should benefi t the most from a recovery of non-mining sectors, given their metro economies are more diverse, and financial and business services are more important.
Source : CBRE Global Investors