The presentation by Ryan Felsman outlines key economic trends including global growth, rising asset prices, and increasing interest rates, with specific focus on the effects of U.S. policies and China's economic rebalancing. It highlights the current state of the Australian economy, noting modest wage growth and cautious consumer behavior amidst tighter lending standards. Additionally, it summarizes the 2018 federal budget measures, including tax cuts and infrastructure investments.

3. Ryan Felsman, Senior Economist, @CommSec, 14 June 2018

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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
AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of
Commonwealth Bank of Australia ABN 48 123 123 124 and a Participant of the
ASX Group.
Examples used in this presentation are for illustrative purposes only.

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Two-minute summary
 Global growth lifts
 Rising asset prices, but low inflation
 Global interest rates increasing
 US PresidentTrump’s policies
 Escalating geo-political risks
 Chinese economy is rebalancing
 Jobs now, wages later in Australia?
 Increasing market volatility

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Global growth: Late cycle, has it peaked?

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US: Robust economic activity generates jobs

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US: Inflation stirs, the Fed removes stimulus

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US: Fiscal expansion lifts deficit and debt

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China:A more sustainable growth path

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China: ‘Quality’ growth focus

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China: De-leveraging, but financial stability risks

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China:The Aussie ‘Dining Boom’
2014
2017
2016
2015

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China:Aussie services sector bonanza

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Australia: Record breaker, buoyant businesses

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NSW: Solid labour market, modest wages

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NSW: Cautious consumers still spending

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NSW: Home prices dip

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Australia:Tighter lending standards, debt elevated

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NSW: Firm building, infrastructure boom
Source: Budget Papers

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Bonds: Rates converge

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Bonds & credit: US expansion threatened?

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Equities: Earnings rebound
Source: DB, FactSet

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Commodities & currency: Supply is key, AUD weakens

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New risks:Trade wars, ‘Italexit’ & EM stress

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The Road Ahead
FORECASTS
2018/192017/18
2.75-3.25%2.50-3.00%Economic Growth
2.00-2.50%1.75-2.25%Underlying inflation
5.00-5.50%5.00-5.50%Unemployment
mid 2019end 2018
1.75%1.50-1.75%Cash rate
6,450-6,8506,250-6,650Sharemarket (All Ords)
US73-80cUS72-79cAustralian dollar

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Appendix: Federal Budget 2018

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Appendix: Federal Budget 2018

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Appendix: Federal Budget 2018

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 Tax cuts for low to middle income
earners
 Extend instant asset write off for
small business purchases under
$20,000
 New infrastructure projects
totalling $25 billion
 Don’t proceed with planned lift in
Medicare Levy
 Funding to enable older Australians
to remain in own home for longer
 Abolish superannuation fund exit
fees
 Add medicines to Pharmaceutical
Benefit Scheme
 A third round of the Building Better
Regions Fund
 Funds for Great Barrier Reef, Royal
Flying Doctor service
 Better targeting the Research and
DevelopmentTax
 Welfare, Black Economy, Health
Appendix: Federal Budget 2018 major measures

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