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An Economic Update

An Economic Update. Claire Harding – Head of Portfolio Management. Australian Unity Investments. Crisis averted. Real GDP Growth (year on year). Source: RBA. But it wasn’t easy. Exports - Asia. Source: RBA. Australia - full steam ahead. Australian GDP growth (% p.a.).

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An Economic Update

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  1. An Economic Update Claire Harding – Head of Portfolio Management Australian Unity Investments

  2. Crisis averted Real GDP Growth (year on year) Source: RBA

  3. But it wasn’t easy Exports - Asia Source: RBA

  4. Australia - full steam ahead Australian GDP growth (% p.a.) Contribution to GDP (% year to Sept. 2009) Source: RBA

  5. …and there is lot of steam Australian Exports Source: RBA

  6. Inflation under control … Consumer Price Inflation(%) Underlying Inflation (% year ended) Source: RBA

  7. … for now Wages Australian Dollar and TWI Source: RBA

  8. Global recovery… Source: IMF Industrial Production (% p.a., quarter on quarter) Merchandise Exports(% p.a., quarter on quarter)

  9. … buoyed by policy stimulus Policy Interest Rates Source: RBA

  10. In Australia Australian Cash Rates RBA Official Reserve Assets Source: RBA

  11. But, in the US … Not as stimulative as you might think Source: BCA Research

  12. … and fiscal G-20 Stimulus Plans US$ bn Source: Brookings Institute

  13. An aside on fiscal policy Stimulus Payout - US Real GDP Growth Contribution Source: Moody’s Economy.com

  14. Challenges - where there is smoke… Unemployment Source: RBA

  15. …there may be fire Total Job Vacancies Employment Composition

  16. A consumer confidence game… Consumers – household assets Source: RBA

  17. …where the stakes are high… Consumers - spending Source: RBA

  18. very high US Consumers underwritten by Treasury US$ trillion Index Sources: BEA, FRB, Moody’s Economy.com

  19. Challenge - Public Finances Government Financial Liabilities % of 2008 GDP, (net) Bonds on Issue in Australia Source: RBA

  20. Financial recessions are different Global output Peak at t=0, quarters following Deleveraging has barely begun Source: BCA Research

  21. Prognosis 2010

  22. Outlook – what to expect Global GDP Growth (% p.a., quarter on quarter) Source: IMF

  23. Outlook – what to expect • Private funding problems have been transferred to the public sector- but they still exist • The global economy remains vulnerable to: • Deluge of public debt • Inflation issues • Rising cost of capital • Sovereign debt contagion- e.g. Greece & Ireland

  24. Outlook – how to invest • Market expectations: • Volatility • Equity market raisings • Credit ratings downgrades, a rapid rise in defaults • Dilution and defaults to weigh on equity markets • Grab certainty where you can • Income • Inflation • AUD • Don’t forget the downside

  25. Asset management capabilities

  26. Important information This information has been prepared as general information and for use by financial advisers only. It does not take into account your circumstances. While every care has been taken in the preparation of this information, we cannot warranty its accuracy or completence and we reserve the right to make corrections. Information can change over time.

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