In our opinion, the Australian economy is currently experiencing both positive and negative indicators, as seen in the snapshots provided by the Reserve Bank of Australia.
Starting with the positive indicators, the employment growth rate of 3.4% is quite high, indicating strong job growth in the economy. The average weekly earnings of $1,344.70 is also positive, as it indicates that households have more disposable income to spend on goods and services. Additionally, the economic growth rate of 5.9% is impressive compared to the G7 GDP growth rate of 1.9%. This suggests that Australia's economy is performing well compared to other developed countries.
However, there are also negative indicators to consider. Firstly, inflation in Australia is quite high at 7.8%, which is above the Reserve Bank's target range of 2-3%. This can lead to decreased purchasing power and can be detrimental to the economy in the long run. Additionally, the net foreign liabilities of Australia as a percentage of GDP is at 36.2%, which means that Australia is a net debtor to the rest of the world. While this may not necessarily be a negative indicator, it is important to monitor to ensure that Australia is not becoming overly reliant on foreign investment.
Looking at the composition of the Australian economy, we can see that key sectors include mining, finance, and health & education. This is important information for investors looking to invest in specific sectors of the economy. Additionally, the average price of residential dwellings is quite high at $890,000, which indicates that the housing market may be expensive and difficult to enter for some potential homeowners.
In terms of exports, resources as Iron, Coal, Gas, Gold and others make up the majority at 68.2%, followed by services at 11.4%. It is important for Australia to diversify its exports to avoid overreliance on any one sector. Looking at export destinations, China is the largest at 36.0%, followed by Japan at 12.2%. This indicates that Australia is heavily reliant on exports to Asia.
In terms of how Australians pay for goods and services, cash is still used for 27% of payments, while cards are used for 63% of payments. The use of Buy Now, Pay Later (BNPL) payments has also increased in recent years, with 1/5 of people using this payment method in the last years. This information is important for businesses looking to adapt to changing consumer payment habits.
Overall, the Australian economy appears to be experiencing both positive and negative indicators, and it is important for Investors to pay attention to the composition of the economy and the payment habits of consumers when making investment decisions.
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