Invest
Economy to recover from weakest year since WWII
The global economy is expected to recover in 2021 following the weakest year since World War II, with fiscal and monetary policy continuing to support world economies, a big four bank has forecasted.
Economy to recover from weakest year since WWII
The global economy is expected to recover in 2021 following the weakest year since World War II, with fiscal and monetary policy continuing to support world economies, a big four bank has forecasted.
The Commonwealth Bank of Australia’s (CBA) chief economist Stephen Halmarick has outlined his economic predictions for 2021, with global growth forecasted at 5.2 per cent off the back of strong growth in the US and China.
“In the US, there remains a number of political risks ahead. But, assuming Joe Biden is sworn in as the 46th President of the United States on 20 January 2021, we expect him to focus on a few key policy priorities that should support the US economy throughout 2021 and beyond,” Mr Halmarick said.
The economist also highlighted how despite economic falls in Australia, a win on the health front so far has led to a less severe downturn than first predicted.
“Australia has done a better job than just about any other nation in controlling the spread of the virus,” Mr Halmarick said.
“This, combined with fiscal and monetary policy support being provided to the economy, and the role played by the Australian banking system, means the economic impact of COVID 19 has been less severe in Australia than many other nations, and less severe than initially expected.
“To be sure, Australia’s 30-year run without a recession has come to an end, and the human toll of the sharp rise in the unemployment rate has been very real. But, the outlook for Australia is improving.”
Expect rates to be lower for longer
Despite a stronger economy predicted in 2021, Mr Halmarick said the consequences of the current pandemic are likely to have an impact on monetary policy in the medium-term.
“The recession, the rise in the unemployment rate, the global economic environment, and the expectation that inflation will remain below the 2 to 3 per cent target range for years, has seen monetary policy in Australia enter unconventional space for the very first time,” he said.
He pointed out the cash rate target is expected to remain at just 0.1 per cent for at least three years. The RBA is funding the banking system for three years at 0.1 per cent, and the RBA is targeting the three-year Commonwealth bond yield at 0.1 per cent.
In addition, the RBA is now engaged in a quantitative easing (QE) program and will buy $100 billion of Commonwealth and state government bonds over the six months to April 2021.
“Having entered the world of unconventional monetary policy, it is going to be a long time before the RBA can retreat from providing significant support to the economy,” he said.
About the author
About the author
Economy
Consumer confidence is quickly pushing Australia’s economy from recovery to expansion
Both Australian consumers and property investors came out of last month feeling pretty chuffed about the economy. ...Read more
Economy
4 Aussie cities among 10 most liveable in the world
This year’s global liveability score has been strongly influenced by measures taken to stem the spread of COVID-19, with cities ranked according to how successfully they dealt with the pandemic. Per...Read more
Economy
Australia attended the G7 as a ‘green laggard’, new report shows
Following a weekend at the G7, Australia has been labelled a “green laggard” as a consequence of letting its green competitiveness significantly slide over the past two decades. ...Read more
Economy
Melbourne’s lockdown ends tomorrow
As announced, Melbourne will begin its path out of lockdown as of 11.59pm Thursday evening, but some restrictions will remain. ...Read more
Economy
GDP slows to 60-year low
Australia’s gross domestic product per capita growth has fallen to its slowest pace in at least 60 years, with the massive government spending looking to come at a ‘great cost to future generation...Read more
Economy
Recovery falters just a month after JobKeeper ends
The end of JobKeeper has seen a rise in defaults and administrations, which could hamper Australia’s recovery from the COVID-19 downturn, new research has revealed. ...Read more
Economy
Frydenberg considers JobKeeper return for Victorians
The federal government has granted Victoria Premier James Merlino a chance to pitch his ‘JobKeeper style’ aid, but it has refused to acknowledge that Victoria’s predicament could be linked to fe...Read more
Economy
Australia’s economy is officially back to pre-pandemic levels
As most economists predicted, Australia’s economy is back to pre-pandemic levels, the latest official figures show. ...Read more
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Are property prices set to crash? Should you jump on board the fintok craze? And how to prepare for this tax time
Listen now
Dissecting the budget and what it means for your equities, property and super
Listen now
Has the property market reached its peak; Biden’s climate summit and our sharemarket, and the upcoming budget
Listen now
Economy
Consumer confidence is quickly pushing Australia’s economy from recovery to expansion
Both Australian consumers and property investors came out of last month feeling pretty chuffed about the economy. ...Read more
Economy
4 Aussie cities among 10 most liveable in the world
This year’s global liveability score has been strongly influenced by measures taken to stem the spread of COVID-19, with cities ranked according to how successfully they dealt with the pandemic. Per...Read more
Economy
Australia attended the G7 as a ‘green laggard’, new report shows
Following a weekend at the G7, Australia has been labelled a “green laggard” as a consequence of letting its green competitiveness significantly slide over the past two decades. ...Read more
Economy
Melbourne’s lockdown ends tomorrow
As announced, Melbourne will begin its path out of lockdown as of 11.59pm Thursday evening, but some restrictions will remain. ...Read more
Economy
GDP slows to 60-year low
Australia’s gross domestic product per capita growth has fallen to its slowest pace in at least 60 years, with the massive government spending looking to come at a ‘great cost to future generation...Read more
Economy
Recovery falters just a month after JobKeeper ends
The end of JobKeeper has seen a rise in defaults and administrations, which could hamper Australia’s recovery from the COVID-19 downturn, new research has revealed. ...Read more
Economy
Frydenberg considers JobKeeper return for Victorians
The federal government has granted Victoria Premier James Merlino a chance to pitch his ‘JobKeeper style’ aid, but it has refused to acknowledge that Victoria’s predicament could be linked to fe...Read more
Economy
Australia’s economy is officially back to pre-pandemic levels
As most economists predicted, Australia’s economy is back to pre-pandemic levels, the latest official figures show. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
