The Australian economy hits another rough path – implications for investors

Shane Oliver, Head of Investment Strategy and Chief Economist

This article looks at the recent softening in Australian economic growth and the implications for investors.

The key points are as follows:

  • Annual Australian growth slowed to 1.7% in the March quarter hit by bad weather and weak consumer spending.
  • A declining drag from falling mining investment, strong public infrastructure spending and a likely resumption of trade contributing to growth should all help keep Australia out of recession. However, soft consumer spending and a slowing in the housing cycle will act to constrain growth to below Reserve Bank of Australia (RBA) and Government forecasts. As such, there is far more change of another RBA rate cut that a hike over the next year.
  • Australian shares will likely be higher by year end. But global shares are likely to continue outperforming.

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