Business Planning Workshop Register now In this action-packed 2…Read More
Register Now Preview modal- Financial markets are moving and…Read More
Economic Trends for 2020 Posted on December 17, 2019
The 2019 Australian economy has had us all on the edge of our seats as we watch global events unfold around us. So what’s in store for 2020 and what is the best option for your wealth? We have some general market predictions that might help you to manage wisely.
The economy: Some say we’re at a “gentle turning point” in the right direction. Australia’s economic growth accelerated to 1.7% in the year to the September quarter from 1.6% in the June quarter. So that’s good news.
GDP: The RBA forecasts 2.5% GDP growth in the fiscal year ended June 2020. This is a steep increase from our current base line of 0.4%, but we hold high hopes.
The RBA’s interest rate cuts and the Morrison government’s tax cuts implemented in July did not pack the punch they were intended to. While households have an increased disposable income of 2.5%, they’re not passing it on to the Australian economy. The household savings ratio jumped to 4.8% in the September quarter – the highest in 10 quarters – from 2.7% in the previous quarter
Interest rate: The RBS reduced the interest rate this year from 1.5% to 1.25% in June and 1% in July – it cut rates again to 0.75% in October 2020 will expect to see the RBA take interest rates to its limit of 0.25% in 2020.
Property prices: Property values are increasing due to the combination of lower interest rates, easier access to credit and increased certainty about housing taxation. Nationwide property prices are likely to continue to rise till the end of the year, especially in Sydney and Melbourne. The Central Coast is experiencing the migration of Sydney-siders looking to get more bang for buck within commuting proximity to Sydney. Central Coast property prices have increased this year and are expected to rise further in 2020.
Investment: 2020 will be as focused on global events such as the US/China trade war as 2019 was. Diversification is the safest bet always.
Some new trends are expected to make a bigger impact in 2020. The sharing economy enables investors to buy a smaller piece of a decentralised asset, using technology to find matches between providers and users of capital, rather than automatically turning to a bank as an intermediary.
Competition between FinTech’s will also increase, providing more options for consumer investment and better value. There is a shadow side though. Cyber threats and scammers can make investment options difficult to assess so we recommend professional assessment before you pour your money into a new investment.