This presentation discusses the global and Australian economic outlook. Key points include: - The global economy is growing moderately, led by China, the US, and India. Questions remain around low oil prices, bank exposure, and China's transition. - The US economy is growing but inflation is low, so interest rates will rise gradually. China is rebalancing its economy as production slows. - Australia's economy is in good shape with low unemployment, record car sales, dwelling starts, and tourism. Business investment signals are mixed. The job market and housing sector are improving.

1. Savanth Sebastian, Economist, @CommSec
BridgePoint Directors’ Briefing March 2016
http://tickets.nytc.com.au/outback-regional-showcase

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Important Information
This presentation has been prepared without taking account of the objectives,
financial situation or needs of any particular individual. Before acting on the
information in this seminar, you should consider its appropriateness to your
circumstances and, if necessary, seek appropriate professional advice.
Commonwealth Securities Limited ABN 60 067 254 399
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ASX Group.
Examples used in this presentation are for illustrative purposes only.

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A Volatile Start to 2016
Questions, Questions
q How low will oil go?
q How exposed are banks
to energy companies?
q Where to for China?
q US rates to rise again?

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…volatile as markets are expensive…

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Global Economy: OK Drivers of world economy
Contribution to growth 2016 (pct points)
1.02China
0.64United States
0.24India
0.09United Kingdom
0.08Germany
0.06Korea
0.06Indonesia
0.06Japan
0.05Australia
0.05Spain
0.04France
0.04Mexico
0.04Canada
0.03Italy
0.03Philippines
0.03Turkey
0.03Nigeria
0.84Other countries
3.4WORLD
Source: IMF, CommSec

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United States: Rates in focus
Stocktake
q Economy grows
q Jobless rate at 5%
q Housing lifts
q But inflation low
q Rates to rise gradually

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China: Rebalancing
Stocktake
q Production slows
q Retail sales near 11%
q Rebalancing continues
q Scope to ease
q Sharemarket eases
q Currency questions

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Australia: In good shape
Stocktake
q Jobless rate at 2 year low
q Record car sales
q Record dwelling starts
q Record tourist arrivals
q Above-normal spending
q Lending at 7 ½-year high

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Australia

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Investment: Mixed signals

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Business: Still positive
So What? Interest rates, jobs implications

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Job market improves

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Housing: leads the way
Stocktake
q More homes
q Apartments dominate
q Slower population
q Softer home prices
q Watch vacancies

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Rising wealth

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Retail & Foreign investment
What We Bought
2015 calendar year, real annual growth
% changeReal (inflation-adjusted) spending
10.4Electrical, Electronic & Gas Goods Retailing
8.6Footwear & Other Personal Accessory Retailing
7.5Furniture, Floorcovering And Textile Goods Retailing
5.3Clothing Retailing
4.9Hardware, Building & Garden Supplies Retailing
4.6Flowers, antiques etc
4.3Pharmaceutical Cosmetic And Toiletry Retailing
3.6Department Stores
3.0TOTAL
2.3Takeaway Food Services
1.3Supermarkets And Grocery Stores
1.2Liquor Retailing
1.1Cafes And Restaurants
-2.4Butchers, fruit, bread, fish shops
-2.7Sporting goods, toys, video games
-12.6Newspapers And Books
Source: ABS (unpublished), CommSec

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Australian Interest Rates
Stocktake
q ‘Easing bias’
q But good economy
q Low inflation
q Volatility watch
q Jobless rate in focus

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Australian Dollar
Stocktake
q US rates to rise
q Aussie rate cut?
q China doubts
q Commodity prices ease
q Firmer Aussie economy
q Tourism lifts

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Outlook
FORECASTS
20162015
2.50-3.00%2.00-2.50%Economic Growth
2.50-3.00%2.25-2.75%Underlying inflation
5.50-6.00%5.50-6.00%Unemployment
end 2016mid 2016
1.75-2.00%1.75-2.00%Cash rate
5,500-5,7005,200-5,400Sharemarket (All Ords)
US68-75cUS64-72cAustralian dollar