ARE THINGS ALL WELL?
CMPA – General Meeting Friday 14th March
NAB PRESENTATION –
Like most participants of various associations, including those of the CMPA, we attend meetings for the prime reason of rubbing shoulders with our established customers, prospective buyers and also, as associate members, a chance snoop on the opposition.
Generally we don’t take much notice of agenda items and more disappointingly some don’t even bother to show up at all. How real is that? How disappointing.
Well in this case, those people who took time out of their busy day to day activities were the lucky ones. David Lansley of the National Australia Bank provided attendees with his perspective on Australia’s economic outlook.
Through the use of plotted charts and graphs, he was able to drive home a message that perhaps ‘all’s not well’ despite how good things are currently, in the Land of Oz.
Global uncertainty relating to politics and war, was forcing down cash rates. The OECD leading indicators are signaling a slowdown throughout the world. Rising oil prices, weak and volatile equity markets, a weaker US dollar and falling bond yields is seriously effecting the economic outlook.
The Australian market, despite world trends, was still forecasting growth however, private consumption, dwelling investment and business investment were all forecasting a reduction. The drought was forecast to cut 1 per cent of the GDP.
Farm incomes would be reduced by up to 80 per cent and export earnings by 13.5 per cent. Interestingly household spending was declining at a more rapid rate in Victoria than the Australian average. Building approvals were also reflecting similar trends. The leading indicators suggested that dwelling investment would fall around 10 per cent however the drop would not be as severe as 2000.
Globally, the US economy is still a ‘soft spot’, whilst the European and Japanese remained relatively weak. Domestically the drought situation is the main risk as this will impact on export goods and cause steep increases in food prices. The flow on would also be felt in downstream industries such as transport, wholesale trade and manufacturing of products from agricultural outputs.
There is no doubt that the Australian outlook is dependent on global events and the drought. The key indicators to look for will be the Iraq outcome, equity and oil markets. The Australian economy is currently running at 3 per cent, being held back by global weaknesses.
The message coming through was relatively simple. Tread carefully.
We are not on this planet on our own, nor are we impervious to outside influences. Our industry has been enjoying exceptional growth and profits, which may not be sustainable. We need to store away these fruits for the looming time ahead.
Sam Scata
BT Equipment Pty Ltd.
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