September 21, 2023

Improve Our Home

Australian financial and monetary markets replace

8 min read

Every month the RBA summarises macroeconomic and monetary market developments in Australia by offering an in depth chart pack.

If an image paints a thousand phrases, then this assortment of charts ought to do a fairly good job of portray the panorama because it impacts our financial system and our property markets.

World Economic system

  • Australia’s financial system does not function in isolation, so it’s important to maintain monitor of how the economies of our main buying and selling companions are performing.
  • And as you possibly can see from the chart beneath financial progress is slowing around the globe, and the IMF suggests quite a lot of nations may fall into recession in 2023.

Gdp Growth World

  • After all, Australia will not be the one nation affected by inflation,. As you possibly can see from the chart beneath it is a worldwide phenomenon made worse in 2022 by numerous points attributable to the warfare between Russia and Ukraine.

Inflation Advanced Economies

Australia’s Economic system

  • Australia’s financial system has carried out higher than most different superior economies during the last yr, nevertheless, the Reserve Financial institution is hellbent on slowing down our financial progress to rein in inflation.
  • After a powerful yr of financial progress pushed by client spending and exports from our mining sector, the RBA is now strolling a tightrope attempting to get inflation underneath management with out slowing our financial system an excessive amount of and inflicting a recession.
  • Nevertheless, Australia will very possible keep away from a recession because of important immigration-driven inhabitants progress which can drive up demand for items and companies.

Gdp Growth

  • After all, inflation was the Buzzword in Australia in 2022 and is about to be the main focus of media consideration once more all through 2023, however it’s possible that it has now reached its peak, however this may solely be reported over the following couple of months.
  • The Australian Bureau of Statistics reported a 1.9% improve within the CPI within the December quarter. Mixed with the robust will increase within the first 9 months of the yr, inflation in 2022 was on the highest price since March 1990. This displays a post-pandemic spend-a-thon

Consumer Price Inflation

Family Sector

  • The next chart exhibits how the disposable revenue for Aussie households has dropped during the last yr as they’ve grappled with rising prices.
  • Regardless of the Reserve Financial institution’s finest efforts to decelerate family spending, we’re nonetheless spending up massive on discretionary gadgets reminiscent of garments, eating places, and life-style, defying value of residing pressures.
  • Nevertheless the newest retail gross sales figures fell extra sharply than many anticipated, however this was following a powerful Black Friday / Cyber Monday gross sales growth
  • This chart additionally exhibits our financial savings ratio has now dropped to shut to pre-pandemic ranges as we hold spending our stashed money to help our existence.

Household Income And Consumption

I hold cautious monitor of client confidence as a result of it is a good main indicator of what is forward for our financial system and property markets.

The media’s continuous barrage of unfavourable information about inflation mixed with falling home costs and rising rates of interest is having a big impression on client sentiment:

At present, client confidence is at traditionally low ranges, which is likely one of the causes our property markets have been slumping.

Clearly, folks do not make important funding selections after they’re not assured about their monetary future.

Consumer Sentiment

  • Whereas rising rates of interest and inflation have eaten away on the common family finances, generally Aussies have considerably extra fairness of their houses than they’d three years in the past and have significantly extra financial savings stashed of their financial savings or offset accounts than they’d originally the pandemic, three years in the past.
  • The next chart exhibits our web wealth place, and that our important belongings are in actual property (notably our houses) and monetary belongings (together with our superannuation.)
  • As you possibly can see, the web wealth place of Australian households is excessive since asset progress has outpaced the elevated debt ranges, that means our web wealth place, whereas falling a little bit recently, may be very robust.
  • The Australian residential property market is valued at round $9.3 trillion, but there may be solely round $2.1 trillion value of debt towards this massive asset base. In actual fact, 50% of householders do not have a mortgage towards their houses.

Household Wealth And Liabilities

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