Have you been a little spooked by all the negative world economic news?
Have you wondered how this is going to affect our Australian economy and our property markets?
Well…global economic growth is going nowhere according to Warren Hogan, chief economist at ANZ.
This will clearly adversely impact Australia’s economic growth and keep our interest rates low for longer.
In fact there is a good chance interest rates will drop again in the next few months to help boost our local economy.
Here’s what Hogan had to say:
ANZ has lowered its global growth forecasts for 2016 and 2017 amid a number of restrictive cyclical and structural themes playing out across the world economy and warned there could be further downgrades ahead.
Global growth is now expected to remain more or less unchanged at 3.5 per cent over the next couple of years.
The new figure compares to previous forecasts of 4 per cent by 2017.
Additionally, the risks are skewed to further downward revision in the near term, due to factors including slowing potential growth, still-sizable debt overhang and output gaps in many advanced economies.
The potential for a global manufacturing and/or trade recession, financial liberalisation in emerging markets and ongoing nagging global current account imbalances are also concerns.
Among developed economies the outlook is for steady-to-slightly improving growth
The US is likely to be a standout, expected to grow by around 2.5 per cent in 2015, but it is difficult to see how it can maintain a rate of around 2 per cent over the medium term.
Asian giant China is expected to slow to 6 per cent over the next two years.
This would be a respectable outcome for an economy that accounts for nearly one-fifth of global GDP.
Japan and Europe are expected to grow between 1 per cent and 2 per cent.
A shift to lower growth is desirable both for China and the world economy.
If Chinese authorities tried to resist such slowing it could lead to excessive leverage and asset bubbles. This would in turn be a threat to global economic and financial stability.
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