There are definitely reasons to be optimistic about the Australian economy. The back half of 2020 signalled the first time in 60 years of data that we have seen two quarters in a row of over 3% economic growth each quarter.
This month the Australian Bureau of Statistics revealed that the economy grew by 3.1% for the December 2020 quarter. This is in addition to 3.4% growth in the September 2020 quarter. The strong economic turnaround in the second half of 2020 helped to recover a lot of the damage caused by COVID-19 in the first half of the year. Whilst overall, the economy shrunk by 1.1% in 2020; it's really not a bad outcome considering the severity of the pandemic.
Admittedly, this economic recovery is coming off a low base, however, it highlights Australian’s are keen to start spending money again with much pent-up demand. For example, vehicle purchases were up 31.8% for the December 2020 quarter.
To almost be back at pre-COVID economic levels is a fantastic result, especially considering how dire the situation appeared to be in mid-2020.
Low-interest rates and government stimulus packages have helped to spur on the recovery. The positive economic data that was received last week was especially welcomed in light of the job keeper program that was started to be wound back late last year.
While the recovery has been swift, it's not smooth sailing for all, with sectors such as hospitality still finding their feet as the economy opens up. Also, as we have all experienced, the virus can rear its ugly head with outbreaks that may cause future lockdowns, and with that does come economic uncertainty for some sectors, however overall the numbers are something to be optimistic about.
What does this all mean for investment markets? The property market seems to have shrugged off the virus as it surges on, spurred by low-interest rates. The S&P/ASX 200 Index currently sits around 6,800 points, some 5% below its peak of February last year.
The sharemarket has been resilient, bouncing off the COVID-19 lows. That is not to say there will not be any risks moving forward. As always at Hewison Private Wealth we manage well diversified portfolios and diligently rebalance back to the portfolios target asset allocation to manage the risks.
It was pleasing to see the positive economic news at the start of March, particularly when comparing Australia’s economic performance against our global counterparts.
Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email email@example.com or visit www.hewison.com.au
Please note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.