Rising Tide Blog

Economic Update (in less than 2 minutes!)

Posted by Matt Hale

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As some of you will be aware, Australian Retirement Trust (ART) is one of Australia’s most significant industry super funds, and they look after the retirement savings of many Rising Tide clients. In late March, I was fortunate to have lunch with Brian Parker, the Chief Economist at ART and was able to pick his brain on what the future holds. I wanted to get an economic overview from someone I trust and who definitely knows their stuff (Brian makes the big calls on the $200 BILLION of their members’ money that ART looks after).

Some of my takeaways from the discussion:

  • By the time the petrol excise ends in late 2022, the price of oil should be back to a more ‘normal’ level – meaning we will have a win at the pump. The primary reason for the reduction in oil price will be an increase in supply. This was because many refineries around the globe shut down during COVID and are now finally getting up and running again.
  • Ignore all the property market predictions – no one has been right in the last 15 years and this trend will likely continue. There are so many variables, including increased immigration, which will impact things (and not just interest rates like the media will have you believe).
  • Interest rates will be higher in twelve months than now – this is pretty much guaranteed. 
  • Australia is a beneficiary of the Russia/Ukraine situation – we have lots of stuff in the ground that the world wants (like iron ore), and Australia is also a leading exporter of wheat. As Russia is a significant wheat exporter and lots of countries are black banning them, there will be a higher demand for our wheat and other grains.
  • COVID and the supply chain is the primary driver of inflation – no one has a crystal ball, so it’s hard to know when and how this situation will end.
  • We stayed right away from the political discussion, but in his opinion, the Liberal government have done a ‘good’ job financially during the pandemic compared to many other governments – unemployment is low, and the cost of living is still OK.

So, what does this all mean for you?

  1. Make measured decisions – whilst there has been some volatility in the share market, this is normal and to be expected as share market growth is never linear. 
  2. Make sure the changes in the world and the effects it has on your money are not keeping you awake at night. If there is any stress, please check in with your adviser and let them know more about what you are feeling.
  3. Make the most of your next review with your adviser. Your strategy needs to reflect not only what is changing in your world, but also the broader economic climate. Be clear about what you would like to achieve, and we can help by overlaying our experience when it comes to investment markets.

Make sure you check out more superannuation information here, and, as always, don’t hesitate to get in touch with us if you would like to discuss anything in more detail!