Invest
‘They don’t hurt that much’: Trade war unlikely wipe to growth
In good news for investors in international shares, one of the nation’s top economic forecasters believes the US versus China trade war’s implications for global growth have been overblown.
‘They don’t hurt that much’: Trade war unlikely wipe to growth
In good news for investors in international shares, one of the nation’s top economic forecasters believes the US versus China trade war’s implications for global growth have been overblown.
The latest Business Outlook from Deloitte Access Economics partner and economist Chris Richardson notes that despite worsening trade wars, global growth remains strong.
Mr Richardson said that although tariffs do hurt growth, “they don’t hurt it by all that much”. However, the forecaster believes US President Donald Trump’s assertion that “trade wars are good” is doubtful.
“The Donald says ‘trade wars are good, and easy to win’. We doubt that, though the impact of a trade war is likely to be far more muted than much media reporting would suggest,” Mr Richardson said.
“Setting aside all the noise, the backdrop for Australia’s balance of payments isn’t that bad. There will be some pressure on the current account deficit in the next few years as commodity prices soften and interest rates lift here and around the world, but the impact isn’t expected to be all that dramatic.”
The Deloitte Access Economic report noted that the geographic base of growth continues to narrow, growing more dependent on the US. Mr Richardson believes that this poses two problems.
“First, synchronised strength tends to be more durable, so the fading synchronicity of the moment is – by definition – riskier than had growth been more widespread. The base is narrowing because Europe and Japan have lost some momentum in their growth,” he said. “And while China’s growth remains magnificent, it too is slowing.”
The second problem is that the spurt in US growth is mostly due to the juice coming from the large business and personal tax cuts enacted in late 2017, Mr Richardson said.
“Those cuts are mostly a one-off prop to growth. The upshot is that, while global growth is excellent now and should remain above trend in 2019, it looks like heading back down the slippery slope come 2020,” he said.
Commenting on the domestic market, the economist noted that despite the house price fall we “had to have”, Australia’s growth has continued to accelerate, and ongoing strength is forecast to be good enough – at a “smidge” above trend both this year and next – to keep job gains solid and unemployment edging down.
“And, with inflation gradually on the rise, that mix should see the recovery in wages continue, albeit at snail’s pace. But that will be a Faustian bargain. Alongside a lift in wage growth there’ll be a matching lift in interest rates, with the latter acting as an anchor on consumer spending – and hence on the wider economy – in the next couple of years,” he said.
Mr Richardson is forecasting that although Australian economic growth will be solid, it won’t be quite as good as global growth, with the current drought adding to the short-term headwinds in play.
Property
First home buyers at the frontline of Frydenberg’s charm offensive
There are few surprises to be found in this year’s federal budget, with Australian property investors and first home buyers set to benefit from new and expanded measures. ...Read more
Property
May could be the beginning of the end for housing pricing boom
Experts have suggested that recent growth in prices could mark the peak of the pandemic bounceback for the housing market. ...Read more
Property
Treasurer announces home loan assistance packages for single parents
The federal government has announced a new scheme targeted at helping single parents with limited deposits into the housing market. ...Read more
Property
Australian housing market now valued at $8 trillion
The Australian dwelling market has reached a new record high, with the total value of residential real estate breaking the $8 trillion mark for the first time. ...Read more
Property
A generation of Aussies could be locked out of the housing market as prices boom
A booming property market is set to see a generation of younger Australians priced out of the market, a shadow assistant minister has said, challenging the narrative that younger people are failing...Read more
Property
Is the property market reaching its summit?
While home values continued to rise across the country in April, current trends are pointing to the possibility that the property market has peaked, a new report has revealed. ...Read more
Property
Wait, so it’s definitely cheaper to rent than buy?
New research has revealed that there are indeed dwellings in Australia that are cheaper to buy than rent (57 per cent to be exact), but where are these dwellings located and are they liveable? ...Read more
Property
‘List your homes before the good times run out’
Aussies who had planned to sell their house prior to the pandemic are being urged to realise those plans now, with buyers said to be immensely hungry for housing. ...Read more
Has the property market reached its peak; Biden’s climate summit and our sharemarket, and the upcoming budget
Listen now
Is the market overheating; should ETFs take your fancy, and what’s happening to the low and middle income tax offset?
Listen now
Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now
Raging floods, the tech stock bubble and the ongoing SG debate
Listen now
Property
First home buyers at the frontline of Frydenberg’s charm offensive
There are few surprises to be found in this year’s federal budget, with Australian property investors and first home buyers set to benefit from new and expanded measures. ...Read more
Property
May could be the beginning of the end for housing pricing boom
Experts have suggested that recent growth in prices could mark the peak of the pandemic bounceback for the housing market. ...Read more
Property
Treasurer announces home loan assistance packages for single parents
The federal government has announced a new scheme targeted at helping single parents with limited deposits into the housing market. ...Read more
Property
Australian housing market now valued at $8 trillion
The Australian dwelling market has reached a new record high, with the total value of residential real estate breaking the $8 trillion mark for the first time. ...Read more
Property
A generation of Aussies could be locked out of the housing market as prices boom
A booming property market is set to see a generation of younger Australians priced out of the market, a shadow assistant minister has said, challenging the narrative that younger people are failing...Read more
Property
Is the property market reaching its summit?
While home values continued to rise across the country in April, current trends are pointing to the possibility that the property market has peaked, a new report has revealed. ...Read more
Property
Wait, so it’s definitely cheaper to rent than buy?
New research has revealed that there are indeed dwellings in Australia that are cheaper to buy than rent (57 per cent to be exact), but where are these dwellings located and are they liveable? ...Read more
Property
‘List your homes before the good times run out’
Aussies who had planned to sell their house prior to the pandemic are being urged to realise those plans now, with buyers said to be immensely hungry for housing. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
