Economic update by Craig James, CommSec to Sullivan Dewing on July 28, 2015. The economy made simple in 17 slides.

1. Craig James, Chief Economist, @CommSec
July 2015

2. Important Information
2
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.

3. …but first….
3
Economic growth 2.75-3.25%
in 2013/14
2.75-3.00%
in 2014/15
Inflation 2.50-3.00%
end 2014
2.50-3.00%
mid 2015
Unemployment 5.50%-6.00%,
end 2014
5.50-6.00%,
mid 2015
Cash rate 2.50-2.75%,
end 2014
2.75-3.25%,
mid 2015
Sharemarket
(All Ords)
5,700 points,
end 2014
6,100 points,
mid 2015
Australian dollar US97c
end 2014
US95c
mid 2015

4. 4
World economy OK

5. 5
Australia
In Short
 Could do better
SoWhat?
 Job market risks
 Inflation to stay low
 Rates to stay low
 Weaker currency?

6. 6
Light in tunnel for business?
SoWhat? Multiplier benefits; Policy implications

7. 7
Australia
“Despite the doom and gloom and fulminations over the
airwaves, in newspapers and in cyberspace, business
confidence has risen in recent months.”
“Perhaps we might be allowed to conclude that we have
been meeting some of our challenges, thus far, with
outcomes that, while not perfect, are not too bad.”
Reserve Bank Governor, July 22

8. 8

9. 9
Still spending

10. 10
More homes being built
In Short
 Firm housing market
SoWhat?
 Positive for building trades
 Positive for retailers
 Need to follow cycle

11. 11
Job market to improve?

12. 12
Inflation contained
In Short
 Headline inflation 1.5%
 Underlying inflation 2.3%
SoWhat?
 Rates can stay low
 Pressure on margins
 Need to keep costs low

13. 13
Rising wealth

14. 14
Interest Rates
In Short
 Cash rate to stay low
So What?
 Tough for investors
 Forecasters divided
 Economy in focus
 Inflation is key

15. 15
Investments
In Short
 Challenges for shares
SoWhat?
 Diversification
 Low cash continues
 Mixed prospects

16. 16
Exchange rates
In Short
 Much depends on US
So What?
 Impact on travellers
 Impact on costs
 Impact on consumers
 Boost for business

17. 17
Outlook
FORECASTS
mid 2016end 2015
2.50-3.00%2.25-2.75%Economic Grow th
2.50-3.00%2.25-2.75%Underlying inflation
5.50-6.00%5.75-6.25%Unemployment
mid 2016end 2015
1.75-2.00%1.75-2.00%Cash rate
6,000-6,2005,800-6,000Sharemarket (All Ords)
US68-73cUS69-74cAustralian dollar