Australia: Where to from here?
Given the current period of inflation, high interest rates and a potential global recession, how are Australian equities positioned to perform as we move into 2023? We speak to Paul Taylor to hear his thoughts.
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I think, actually, Australian Equities are incredibly well-positioned. Now, it's interesting, we sit here in So, and we're worried about a range of different things. We are worried about inflation, we're worried about interest rates, how high that can go. If we start to get 7% mortgage rates, that's going to put a big strain on the consumer, that's going to put a big strain on what they're spending in the marketplace, in the economy. So, we're worried about all those different points. But actually, relative to the rest of the world, Australia's in an incredibly strong position.
We're an energy exporting country. We have a lot of commodities, and actually really importantly, high quality and low cost of production on the commodities. And that's not just hard commodities like iron ore or coking coal or lithium or copper or nickel, it's actually soft commodities. And what we're seeing is that the farming sector's doing very well out of the soft commodities, wheat and barley, et cetera. Australia exports a lot of that as well.
So, we've got a lot of the products the rest of the world wants. We're a long way away from a lot of the geopolitical issues in the world, the issues around Ukraine and Russia, and I guess we continue to be the lucky country. And like I said, we think while the US and Europe will most likely go into recession, we think Australia will avoid recession, and still much lower growth, but potentially miss out on the recession yet again because of all those really positive factors. And obviously as a global firm, we get a lot of contact from different people around the world. I must admit, we're getting a lot of interest from overseas investors looking at Australia. Understanding the risks, but also looking at Australia and thinking, Australia still looks so much better than the rest of the world. So, Australia's in the spotlight at the moment.
