ECONOMIC UPDATE 2022
The economic figures from the December 2021 quarter suggests a 3.75% increase in the Gross Domestic Product (GDP) of Australia in 2021/2022 and a 3.50% GDP increase in 2022/2023. This is an improvement on the GDP contraction of 1.9% for the September quarter 2021. The positive sectors for the Australian economy have been Financial and Insurance Services, Mining, Agriculture, Forestry, Fishing, Information Media, and Telecommunications. This and other reasons place Australian unemployment at the lowest it has been in 13 years.
Additional good news is that the savings of Australians has increased from 11.8% to 19.8%. The Australian economic and financial conditions have improved and are continuing to do so. A rebound in demand and conditions is further expected.
Inflation is a determinant of cash rates and home loan interest rates. The Banks add a ‘buffer’ percentage to home loan interest rates to allow for inflation. This is one of the reasons we are hearing about an increase in interest rates over the next year.
Inflation has been a bigger concern in the USA with a rate of 7%, Europe at 5%, the UK at 3.8% and Australia at 3%. Once again Australia is holding its own against other nations. Just because the USA has a higher inflation rate, it does not mean this will apply to Australia.
Select investments in Australia now represent opportunity because of the recent statistics and the outlook going forward. Despite world events happening in 2022, the Australian economy has a positive outlook.