Last week, to the IMF gave the Australian economy a positive report card — with a projected growth of 1.8% for 2011, and 3.3% for the ensuing 12 months.
Clearly there is international concern about the state of affairs within Europe and the US.
However, that belies the positive impact being provided by the rest of the world.
Although China’s growth is slowing, it still remains at a healthy 9% per annum; and India is not too far behind at 7.5% per annum.
When you add to that Latin America at 4%, and parts of Africa at close to 6% … you then start to see the northern Atlantic problems in some perspective.
Unlike what many pundits would like to have you believe, the current issues in Europe and the US do not automatically translate into problems for Australia.
The only faint connection is one of mindset — being when stock markets fall, we generally feel far less optimistic. But you actually need to look a little deeper than that.
Nowadays, Australia’s economic connection with Europe and the US is far less than it was 10 years ago. And China is now our strongest export partner. Therefore, the real question is … how closely is China linked to Europe and the US?
Again, those links are nowhere near as strong as they were a decade ago — because China’s latest five-year plan is strictly focused upon internal infrastructure and growing domestic demand, for its own production output.
Accordingly the likely impact of the current north Atlantic problems upon China will be minimal.
Bottom Line: The Australian manufacturing the sector has clearly been suffering. And the consumer sentiment surveys tend to paint a fairly glum picture.
However, behind all of that, Australia’s consumer spending actually grew by 3.2% during the 12 months to June this year. Plus business investment has been solid, and is likely to improve over the next three years.
Therefore, try to keep your focus on the underlying strength of both our economy and the Commercial property market. Because, now is the time to you set yourself up for the next 5 to 6 years of growth.