Australia After the Floods, NZ Quake, Japan's Tsunami

This week Food Strategy attended an informative seminar by Mr Spiros Papadopolous (Senior Economist, Global Markets Research for National Australia Bank).
Spiros produced a crystal ball to give an economic outlook for Australia in the aftermath of the devastating floods and more recent New Zealand and Japanese earthquakes and tsunami.



Flooded home Brisbane. See Youtube video of inside click here

 He compared previous global trends to hilight the extremely good position Australia is in compared to the rest of the world. After the roll on of the GFC into the floods, the east coast of Australia is starting to feel a bit tired. While the next few months will be a bumpy ride the economic outlook for 2012 is quite good.

Australia's growth has been affected by the floods in the short-term, but the medium term outlook looks strong.  Wages and prices will likely trend higher.
CPI inflation for March to Jun is expected to be high but will flatten after then.  Consumers have been cautious with spending by paying down debt or investing their cash in the bank.  This has also been reflected in retail sectors.
The RBA cash rate has been on hold since November however Spiros tips it will rise a few points in the coming months.
Key issues for Australia after the Japanese quake: Japan is 15% of Australia's trade (China 22.5%) 19% of exports and 9% of imports. Main exports are coal, iron ore, beef, aluminium, LNG, nickel, sugar.  In the short term commodity demand will fall as large manufacturing plants close.  However in the medium term, demand from reconstruction projects, coal and gas fired electricity will exert upward pressure on commodities.
There is $A133bn of resource projects currently committed or under construction which is 10% GDP.
Spiros predicts that the Aussie dollar will peak strong against the USD to $1.05 in June 2011 and beging to decline as the US economy slowly claws back.
In Summary:

• The global economy is improving and Chinese growth remains strong
• Commodity demand will see strong resource investment in Australia
• Household caution is keeping RBA interest rates on hold
• Labour market is strong and umemployment is falling
• RBA cash rate to rise further to contain wage and price pressures

Rebuilding after the floods coupled with strong business investment looks positive for a healthy 2012.
For the full story, graphs and stats: Download seminar slides here. (PDF file titled "After The Floods")