It’s February and the summer holidays are over for most Australians, but the bushfires and drought in eastern states are far from over. Our thoughts are with everyone affected.
January was unusually busy on the economic front. The International Monetary Fund downgraded its global growth forecasts to 3.3 per cent this year and 3.4 per cent in 2021, citing downside risks from geopolitical tensions and worsening relations between the US and its trading partners. And while the US Federal Reserve left interest rates unchanged in January, Fed chair Jerome Powell said: “Uncertainties about the outlook remain including those posed by the new coronavirus”.
In Australia, the economic impact of the summer bushfires and ongoing drought is also expected to be significant. Inflation lifted 0.7 per cent in the December quarter, taking the annual rate from 1.7 per cent to 1.8 per cent. Also, unemployment fell slightly from 5.2 per cent in November to 5.1 per cent in December. Both indicators fall short of the Reserve’s targets, but they are a positive sign and the Reserve Bank held rates at 0.75% p.a. at its February meeting.
The Westpac/Melbourne Institute survey of consumer sentiment fell 1.8% in January after a 1.9 per cent fall in December. This, along with the impact of the bushfires and drought, has hit business confidence, with the NAB business confidence index falling to six-year lows in December.
Hopefully we’ll get of a bit of rain across the eastern states this week, which may help bring a bit of relief to all the farmers who are doing it tough and the volunteer firefighters who seem to be facing an uphill battle this last 6 months. The loss of human life, homes, cherished possessions, livelihoods and the impact on our native animals has been tragic and our thoughts and best wishes go out to all those impacted by the droughts and the fires.
We have all been touched by the stories of personal loss and bravery over the last few months, and also the way Australians have reached out in these trying times to lend a helping hand to their mates and to complete strangers. From the high profile activities including the tremendous efforts of the Burrumbuttock Hay Runners, music concerts and donations tied to the Australian Open tennis or Big Bash cricket league, to the not so high profile local fundraising activities and personal donations it is great to see such support being offered in times of need.
Stuart Fitzpatrick and Excel Financial Advisors Pty Ltd are authorised representatives of Interprac Financial Planning Pty Ltd AFSL 246638 registered office at Level 8, 525 Finders Street, Melbourne VIC 3000. This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information. Investment Performance: Past performance is not a reliable guide to future returns as future returns may differ from and be more or less volatile than past returns.