- 12 Aug
So where is the Australian economy at?
What you will learn:
After a period of intense focus on a project which will completely transform Sydney’s CBD and South East sector (you might hazard a guess at which project this is…) it’s good to have an opportunity to lift my head and take a 50,000 foot view of where economic circumstances in Australia are at. So with the caveat that this article contains observations of a personal nature that do not constitute investment advice……
New Sam Wilko Advisory Blog by Peter Wilkinson
It’s good to have an opportunity to lift my head and take a 50,000 foot view of where current economic circumstances in Australia are at. Sometimes you might find that the daily news cycle can be a little misleading.
You may be surprised to note that after a prolonged period of sideways movement following the GFC in 2008, the ASX 200 is well into a multi-year growth cycle that commenced in 2012 (as illustrated by the chart below). And where the ASX goes, the economy generally follows soon after. This trend is reflected in key market indicators world-wide.
Of course, growth rarely happens smoothly and there may be hiccups along the way, most notably as a potential consequence of the recent and significant falls in commodity prices arising from increasing global supply and decreasing demand from China. It would be a great outcome for our local economy to smoothly transition from resources driven to manufacturing and services led. It would also be helpful for most if the property “boom” in Sydney and Melbourne in particular was to gradually run out of energy rather than end abruptly.
A recent Sydney Morning Herald article by Malcolm Maiden provides some useful guidance regarding the likely direction of interest rates – a key indicator to keep a close eye on.
As another telling indicator of what the general business community is feeling – or at least what the media believe the business community is feeling…..a quick look at last Friday’s edition of the Australian Financial Review revealed that the ratio of “bad” to “good” news stories is more than 3:1. The generally accepted rule of thumb is that the economy is half driven by market fundamentals and the rest by investor confidence.
So in broad terms, now is the time to be investing in building business with the potential for medium to long term growth. As ever though, it will be necessary to be focused on the horizon rather than the waves ahead.
About the Author
Peter Wilkinson is a Director of SamWilko Advisory, a company that provides specialist consulting and coaching services to businesses in the transportation, construction and technical services industries. Peter believes that “business, like many of life’s challenges, is all about luck. The best business people work hard and smart and are well prepared for when the luck comes along”. Peter brings 25 years’ plus experience to helping entrepreneurs, business leaders and senior managers who wish to "get lucky" by implementing smart, effective and innovative strategies to better manage time, increase revenue and improve return on equity. Peter's expertise is in developing, implementing and managing transportation and construction businesses and major projects. He specialises in outsourced services and has extensive experience in both private and Government funded infrastructure involving procurement across the full spectrum of contracting methodologies. Peter has applied his asset and systems development and management expertise in the mining, transportation, defence, utilities, property and infrastructure industries both locally and overseas. Peter has refined his project development skills both locally and internationally. Peter has held Executive Management positions within Transfield Services, GHD Pty Ltd and Serco Asia Pacific and has previously held positions with UGL and in the Public Sector with NSW State Rail Authority (now Sydney Trains).