The Australian economy slowed right down in the first quarter of this year. Turnover in the retail sector, a decline in the construction sector, and reduced business capital expenditure have caused economic growth to undercut expectations. At one point, there was talk of Australia sliding into a technical recession, but this didn’t happen.
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Despite this, Australia is still in a period of economic growth. Household consumption is stronger than ever, as millions of Australians take advantage of low-interest rates to buy homes. The mining sector is in decline, but although this has had a negative effect on the Australian economy, Australia’s transition to a broader-based economy is well underway. However, there are a few political and economic events that could impact to the Australian economy in the next twelve months that could impact the whole nation and be of particular interest to those who have savings, trade on such events or run their own business.
Trump Tax Cuts
The Australia Institute is warning that President Trump’s headline tax plan could harm the Australian economy. Scott Morrison, Australia Institute Treasurer, is warning the government not to follow Trump’s lead by cutting corporate tax rates. He dismissed concerns that Trump’s tax cut would encourage US businesses to withdraw their operations and head home to a more favourable tax climate. If the government goes ahead, it would slash the budget by $65 billion.
Royal Commission into the Banking Sector
The banking sector has been under the spotlight for months. The Commonwealth Bank posted profits of $9.88 billion in 2016. This was a 4.6% increase on 2015. The bank’s chief executive boasted that the bank’s stellar performance was down to a focus on “…customer satisfaction, innovation, and financial strength.” Critics argue that the bank has profited from supplying cheap mortgages to Australian’s desperate to get a foothold on the housing ladder.
