At the beginning of the new year it’s customary for commentators to give forecasts for what’s ahead.
Today I'm going to share 10 reasons I'm feeling positive about 2013, but first let me give you my obligatory forecast, which is: Most forecasters will be wrong this year.
Why do I say this?
- You just have to remember all the things we worried about last year that didn’t happen:
- The European Union didn’t break up and its woes didn’t break the banking system;
- America muddled its way through its challenges and its economy is picking up;
- China’s economy slowed down, but didn’t tank like many predicted;
- The mining boom didn’t end, it just moved on to its next phase;
- The Mayan prediction of the world coming to an end was wrong; and
- All those who predicted our property markets would crash were also wrong.
OK – now I’ll stick my neck out and make a prediction...
The year 2013 will be an average year.
Now don’t get me wrong – I’m looking forward to this year. In fact, I’m about to give you 10 reasons to look forward to it to.
Why I’m calling it an average year is that I expect it to be a better year than last year, but not as good a year as 2014 will be.
Here are 10 reasons for optimism for 2013 and beyond
1. The bad news around the world is subsiding
- While the world’s problems haven’t gone away, many of the fears that plagued us last year are subsiding:
- China's economy is resuming its rapid expansion, with its manufacturing output growing at its fastest rate in 19 months.
- The US economy is picking up and didn’t fall off its fiscal cliff of sharp tax rises and spending cuts.
- Europe will remain a basket case for years, but the European Central Bank seems to have stabilised the situation compared with the crisis 12 months ago.
2. Australia’s economy is in good shape
Whether we have a budget surplus or not this year, our economy, which has gone 22 years without a recession, is the envy of most developed nations.
We withstood the deepest global recession since the Great Depression and we are likely to keep growing at around 3% this year.
3. Unemployment is low
Sure some jobs have disappeared, but around 400,000 new jobs have been created in Australia since the GFC and unemployment levels remain comfortable around 5.6%.
When people feel comfortable about their jobs, their more positive outlook is good for confidence, good for consumption and good for investment.
4. Australia's inflation rate is low