Chief Economist of AMP Capital Remains Optimistic about the Australian Economy
Announcement posted by Approved Financial Planners 20 Jul 2015
Financial services firm in Perth reveals seven reasons why “gloom and doom” predictions about the economy may not be as accurate as many believe.
Perth, WA, 20 July 2015 - The financial services field in Perth is a busy one. There have been so many changes in markets, mining, home loans, property and superannuation over the last ten years that it takes talented professionals to keep track of them and help Australians maximise their investments.
Approved Financial Planners is a Perth mainstay. They recently became part of AMP Financial Planning Pty Limited. This allows them to combine years of local knowledge with the resources of one of the largest and most trusted financial services companies in Australia.
Recently, they published a piece on their company blog about Chief Economist of AMP Capital, Dr Shane Oliver, and his counterbalance of those who constantly predict “gloom and doom” for the Australian economy.
According to Dr Oliver, there are seven main reasons to be optimistic about the Australian economy and its ability to fully recover from the roller coaster ride that began shortly before the Global Financial Crisis, continued through the Australian Mining Boom and has led Australia to where it currently sits, slowly recovering but not quickly enough for many economists.
Slow Growth
While the economy is rising, the growth has been painstakingly slow in the eyes of most economists. Year to year growth of the Gross Domestic Product (GDP) as of March was 2.3%, while economists would prefer a number between 3.0% and 3.5%. Consumer spending is up 2.6% but consumer demand is at minus 0.2%. Business investment is at minus 6.2%, but that is due to the mining industry and does not reflect other aspects of the economy.
Reasons to Remain Optimistic
Dr Oliver sees seven reasons to remain optimistic about the economy. He sees the record low cash interest rate as the main reason for optimism. Dr Oliver points out that someone who takes out a $350,000 home loan would pay an average of $750 per month less to do it today than they would have four years ago. This is money that is spent in other segments of the economy.
Dr Oliver also sees rising household wealth as a source of optimism. The market for shares in Australia is providing returns of approximately 10%. Home prices are up 9%. Superannuation funds that are based on balanced growth are providing returns of 14%. This is all seen as a benefit to spending.
Dr Oliver cites other reasons, such as low petrol prices, a high rate of household savings, a low Australian dollar and high export volumes as reasons for optimism. When it is all added together, Dr Oliver feels that Australia managed the mining boom much better than previous booms in other markets. In most booms, a market imbalance is created where too many market segments boom at the same time, only to bust at the same time. This didn’t happen with the mining boom.
The result is an economy that Dr Oliver feels is on its way back up, despite all of the naysayers.
Approved Financial Planners is a financial services firm in Perth. They offer a one-stop solution to financial planning, mortgage broking, retirement planning and investment planning. To learn more or to arrange a free consult, call their Perth office on 1300 787 274 or visit their website: http://www.approvedfp.com.au/.
Approved Financial Planners
Approved Financial Planners Pty Ltd ABN: 52 116 910 528, trading as Approved Financial Planners is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 Australian Financial Services Licence 232706 and Australian Credit Licence 232706.
General Advice Warning
What you need to know.
Any advice contained in this Page is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters.
Approved Financial Planners is a Perth mainstay. They recently became part of AMP Financial Planning Pty Limited. This allows them to combine years of local knowledge with the resources of one of the largest and most trusted financial services companies in Australia.
Recently, they published a piece on their company blog about Chief Economist of AMP Capital, Dr Shane Oliver, and his counterbalance of those who constantly predict “gloom and doom” for the Australian economy.
According to Dr Oliver, there are seven main reasons to be optimistic about the Australian economy and its ability to fully recover from the roller coaster ride that began shortly before the Global Financial Crisis, continued through the Australian Mining Boom and has led Australia to where it currently sits, slowly recovering but not quickly enough for many economists.
Slow Growth
While the economy is rising, the growth has been painstakingly slow in the eyes of most economists. Year to year growth of the Gross Domestic Product (GDP) as of March was 2.3%, while economists would prefer a number between 3.0% and 3.5%. Consumer spending is up 2.6% but consumer demand is at minus 0.2%. Business investment is at minus 6.2%, but that is due to the mining industry and does not reflect other aspects of the economy.
Reasons to Remain Optimistic
Dr Oliver sees seven reasons to remain optimistic about the economy. He sees the record low cash interest rate as the main reason for optimism. Dr Oliver points out that someone who takes out a $350,000 home loan would pay an average of $750 per month less to do it today than they would have four years ago. This is money that is spent in other segments of the economy.
Dr Oliver also sees rising household wealth as a source of optimism. The market for shares in Australia is providing returns of approximately 10%. Home prices are up 9%. Superannuation funds that are based on balanced growth are providing returns of 14%. This is all seen as a benefit to spending.
Dr Oliver cites other reasons, such as low petrol prices, a high rate of household savings, a low Australian dollar and high export volumes as reasons for optimism. When it is all added together, Dr Oliver feels that Australia managed the mining boom much better than previous booms in other markets. In most booms, a market imbalance is created where too many market segments boom at the same time, only to bust at the same time. This didn’t happen with the mining boom.
The result is an economy that Dr Oliver feels is on its way back up, despite all of the naysayers.
Approved Financial Planners is a financial services firm in Perth. They offer a one-stop solution to financial planning, mortgage broking, retirement planning and investment planning. To learn more or to arrange a free consult, call their Perth office on 1300 787 274 or visit their website: http://www.approvedfp.com.au/.
Approved Financial Planners
Approved Financial Planners Pty Ltd ABN: 52 116 910 528, trading as Approved Financial Planners is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 Australian Financial Services Licence 232706 and Australian Credit Licence 232706.
General Advice Warning
What you need to know.
Any advice contained in this Page is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters.