economic review
Glenn Meekin, Chief Financial Officer

The global financial crisis is impacting the Australian economy on a number of different fronts.  Weak global growth is hurting Australia’s traded sector, tight financial conditions continue to impact the provision of finance across the economy and weak confidence is dampening spending.  Exporters have been hit particularly hard.  It is likely that the Australian economy will stagnate in 2009 and may even fall into recession. Australia’s international trade surplus was negatively impacted by $1.5 billion in November 2008, due mainly to a fall in exports.  This was due not only to falling commodity prices but also to lower mining volumes, which is of particular concern.  Iron ore volumes dropped 24% and metallurgical coal fell 15%.

Building approvals data were also of particular concern in November 2008.  Approvals plunged 12.8% in the month (down 35% over the year) with housing approvals falling 9.75% and other dwellings down 21.9%.  A tightening of access to credit has contributed to this result. 

Australian consumer spending has remained stronger than in some geographies, which have had a more negative consumer response to the financial situation.  This is due in part to the relatively low unemployment rate and the Federal Government’s $8.7 billion bonus to pensioners and families.  Data showed that retail sales continued to grow in November and it is expected that the retail sales numbers for December 2008 will be strong.  The weekly Roy Morgan consumer confidence survey reached its highest level since March 2008 in the days before Christmas. 

Source: ANZ Australian Markets Weekly – 8 January 2009