There has been a big debate about the state of the Australian economy after the Q2 GDP data released earlier this month showed a weak 0.2% growth rate, which dragged the annual rate down to just 2%.
But, Deutsche Bank’s Sydney equity strategists, Tim Baker and Joseph Kim, are more upbeat than most on the outlook for the economy at the moment.
In a piece titled, “It’s not 2013 anymore” Baker and Kim react to questions from clients on why they are so upbeat. They highlight six ways the economy has improved since the Coalition was elected.
- In 2013 hours worked fell, but are now growing at 1½%. And the unemployment rate was rising in 2013, but now looks to have stabilized.
- Discretionary consumer spending grew only 1% in 2013, the 2nd worst year on record. But in FY15 it grew 4½%.
- Bonuses for workers were falling in 2013, now they’re rising.
- Housing construction was flattish in 2013, but has risen by 10% over the past year.
- Business conditions (according to the NAB survey) have risen from below average in 2013 to firmly above average now.
- Business credit growth has risen from 2-3% to 5%. And business capex ex-resources was shrinking in 2013 but is now edging higher.
That’s good news for the economy in the months, and quarters, ahead.
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