In the latest episode of our Ask the Experts series, Glen chats with Senior Economist at CBA Belinda Allen, to unpack the state of the economy and her predictions for 2021.
Are you wondering what impact COVID has had on the Australian and global economy? That’s exactly what we covered in the latest installment of our Ask The Experts series. We were so thrilled to be joined by Senior Economist at CBA, Belinda Allen who has extensive experience as a financial market’s economist, working to develop and communicate views on the Australian and the international economies.
In this conversation, Belinda and Glen covered a bunch of topics including:
- How is the Australian economy tracking at the moment?
- How has income support impacted Australian consumer confidence?
- How have international governments managed that pandemic from an economic standpoint?
- What is the impact of international trade tensions on the Australian economy?
- How will a vaccine impact Australia’s economic recovery?
Belinda’s insights about the outlook for our economy
We kicked off our conversation with Belinda by discussing the current state of the Australian economy. After the turbulence we’ve seen in 2021, Belinda shared some very optimistic insights about how our economy is tracking. “We use spending data at CBA to see what Australians are spending their money on and look at what income we’ve seen come through our client’s bank accounts to work out if the economy is improving,” tells Belinda. “It’s clear at the moment that the Australian economy did start growing again in the third quarter, with growth up to around 3.3% (and we expect similar pattern again in the fourth quarter).” Despite Australia’s economy contracting by 3% over the course of 2020, Belinda is positive about our economy’s outlook heading into the New Year. “We’re very confident that the recovery is going to be quite strong in 2021, and we’re expecting growth to be a bit over 4%,” tells Belinda. “Based on our calculations, we’re going to enter 2021 with around $100 billion more than we would have otherwise due to more Australians saving their money in 2020.”
And it seems Belinda isn’t the only one who is optimistic about our economy going into 2021. “We’ve just received new consumer sentiment data that shows we’re experiencing a 10 year high in consumer sentiment. That comes down to two things: the housing market is improving again as well as the very significant income support and interest rate cuts provided by the Government and the Reserve Bank of Australia,” Belinda explains.
As for global markets, Belinda explains that the state of international economies is deeply tied to how they responded to COVID. “From an economic perspective, the way governments and central banks across the world have managed the virus has greatly impact their overall economies. While Australia’s policy was to ‘go hard and go early’, other countries did sit back a little bit. In the US, they’re still debating a fiscal stimulus package and they’re still facing heated conflicting debate (particularly after the recent Presidential election),” tells Belinda.
Our top takeaway points
We discussed a bunch of Belinda’s insights about the current state of the market. So here are the top takeaway points we learned during this session:
- Economic support has been key to Australia’s positive economic outlook: “2020 was a really difficult year to forecast as an economist. However, we have seen things like JobKeeper really help to keep unemployment rates relatively low. At CBA, we think the unemployment rate has already peaked at 7.5% and we predict this will fall to 5.75% by the end of 2021.”
- The property market presents a range of opportunities in 2021: “We predict that property prices will rise in 2021 because interest rates are so low. However, we’re still concerned about inner-city apartments because we don’t have international students returning and overseas migration will remain low for the next couple of years. But overall, we’re seeing strong demand by owner-occupiers and we’re seeing many consumers using their excess saving to put towards purchasing property.”
- The global economic outlook depends on how the pandemic progresses: “For the global economy to get back to any sense of normality, a vaccine would need to be widely distributed and taken up by citizens.”
Keep an eye out on our social channels and upcoming newsletters for more information about our 2021 line up of Ask The Experts live Q&A sessions in 2021. ?
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