Roller-coaster year ahead

CommSec’s call for the year ahead would have to be considered optimistic in light of global economic developments since June 30, but dbdata always considers it better to take the long view. CommSec’s predictions include:

• Interest rate to stay steady for most of 2015-16 before firming in late 2016 as the economy marginally improves.
• The US Federal Reserve is expected to start lifting rates by the end of 2015. § The Chinese economy is expected to continue expanding at close to a 6.5-7.0 per cent annual rate.
• The Aussie dollar is largely expected to hold between US75-80 cents. Higher rates in the US could send $A lower.
• The Australian economy is expected to lift from growth in a 2.0-2.5 per cent range in 2014-15 to 2.5-3.0 per cent in 2015-16.
• The Australian share market is tipped to grow by 9-14 per cent in 2015/16.

The last point I can only wonder about in relationship to economic growth forecasts, but low interest rates combined with a low dollar could see certain import-sensitive sectors get a kick along.

The US Federal Reserve seems to be split about when to start lifting rates and is now being petitioned to postpone any call while the Europeans try to get their house in order.

The Chinese economy is spluttering with its domestic economic stimulus seemingly struggling to get traction. The Chinese Government’s recent performance in trying to control its domestic share market rout is seen as another negative.

The Aussie dollar has already broken down through the $US75 cents mark, but this may help the RBA lift the economy, and indirectly cool down property.

The economic outlook is within most conservative forecasts, including Treasury’s,but a lot will depend on how low commodity prices go and what happens in our biggest market China.

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