Australia's Top Economists Share Their 19 Most Important Charts Of 2013

Here they are: the most important charts for the Australian economy, stock, dollar, housing and interest rate markets.

We asked some of our favourite economists, strategists and analysts in Australia what they thought was important right now and into 2014.

There were a two stand out themes:

  • The Australian dollar, interest rates and monetary conditions; and
  • The post-crisis world with the Fed’s QE program tapering off, the global economy slowly healing, and capital moving back into the big, developed markets.

In charts, here’s what happened this year:

As the global economy recovers, ANZ's Richard Yetsenga says reversification will push money into developed markets.

Reversification has also helped knock the Aussie lower.

And the Aussie Dollar is going lower still, according to ANZ Economics, as the end of the mining boom knocks the wind out of the real effective exchange rate.

A lower Aussie dollar means looser monetary conditions and less RBA easing.

But RBA Governor Glenn Stevens wants the Aussie to go lower still, because he knows that today's monetary conditions are only close to average - hardly stimulatory.

Happily - for the RBA, at least - it looks like the US dollar is at the start of a cyclical uptrend. That will drive the Aussie lower, according to the CBA economics team.

Several economists highlighted Chinese economic shifts as a key driver of changes in Australia. Annette Beacher of TD Securities noted that Chinese growth slowed, imports from Australia soared.

The CBA economics team picked up on the same theme from Australia's latest trade data update.

Australia is lucky that China is still supporting the economy, with local purse strings tightening up. As Craig James from CommSec noted, Australians have a new virtue of financial conservatism.

That conservatism has kept Australia's household savings rate high, as per this chart from Westpac.

But that's finally about to change. According to Shane Oliver from AMP Capital, people are going to start spending again, leading to increased demand in the domestic economy.

An improving economy will lead to higher interest rates in Australia but not for a while, according to the ANZ. Even then, ANZ doesn't expect interest rates to rise by too much.

But there is a warning to borrowers not to overcommit as the property market heats up.

This chart from the ANZ shows that housing finance has spiked though to a new all-time high last month.

Goldman Sachs believes that house prices will continue to rise until the market reaches a new risk-reward balance.

Meanwhile, the Australian stock market isn't expected to do so well next year - Goldman Sachs says it's overvalued.

Westpac shows that Company profits aren't exactly growing strongly.

And Goldman Sachs reckons revenues won't be great either.

Westpac's Chief Economist Bill Evans reckons it all adds up to below-trend growth in the year ahead.

So there we are. A weaker Aussie dollar, below-trend growth, higher rates - but not till 2015 - and a stock market that will underperform the globe. It's all a bit disappointing really - time for an adult beverage or two over the Christmas break. Cheers.

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