Say it softly, but the 2017 calendar year may be the year when the ghost of the GFC was finally laid to rest. As Luke McMillan, National Manager Investment Advice for Perpetual Private points out in the accompanying video, this year we saw economic growth strengthen across most major and developing countries. It’s been a long time since that happened.
Partly as a result, calendar 2017 was a good year for investors with bull markets in most equity markets, good returns from local listed property and solid returns from fixed income investments.
While there is always the potential for unexpected geopolitical events to roll the apples off the cart, the outlook for 2018 is also positive – both locally and overseas.
- The housing market has cooled with efforts to slow the growth in interest-only debt funding of investment property taking effect. This looks to have reduced the risk of a property slump in Australia and may have freed the Reserve Bank to push up interest rates (though we don’t see this happening until late next year).
- In 2018, infrastructure spending and export earnings will underpin the economy. There are also signs of rising business investment, though wages growth is still stagnant. Unemployment is low and inflation completely controlled.
Around the globe
- Since the GFC, it is Central Banks that have supported both economic growth and investment market performance thanks to ultra-low interest rates and quantitative easing (effectively, money printing).
- In 2018, stronger growth means Central Banks can step back from this role. Rates have started to rise in the US, UK and Canada and we’re likely to see government rather than Central Bank policy come to the fore. The most obvious example is President Trump's major tax policy changes, which aim to boost economic growth and bring jobs and tax revenue back to the US.