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As we look across the major economies of the world the effect of the Global Financial Crisis remains with us. Australia continues to fare well.

 ·        USA: At last the US economy is gaining momentum with GDP rising more than expected in Q4.  Amid gradually rising asset prices, lower petrol prices and firming industrial activity, consumer sentiment proved strong.  Consistent with overall growth in the broader economy, the US housing market is picking up following a rebound in pending home sales and 11 consecutive months of house price increases.

·         EURO ZONE: Economic recovery in the Euro zone still seems elusive, as major member countries, such as France and Italy, appear to be locked into a vicious cycle of severe budget cuts, bank deleveraging, rising unemployment and weakening confidence

o   FRANCE: Experienced the steepest fall in business activity, with the combined manufacturing and services activity having fallen to a four year low.

o   GERMANY: Hopes now rest on the ability of  growing, albeit only moderately, German economy to lift the rest of the Euro economies out of the trough.  However unresolved debt crisis in the Euro zone raises prospects of business and consumer confidence falling further across the Euro zone.

o   UNITED KINGDOM:  The UK economy remains mired in recessionary pressures.  The government is determined to push through its fiscal austerity measures for the long-term benefit of the economy.

·         CHINA: Thankfully in Asia our major trading partner, the economic outlook appears more positive.  China’s economy grew at 7.8% p.a. for the whole 2012 and higher than the government’s target of 7.5% p.a.  The confirmation of urbanization is a top policy priority, continued to drive robust investment and consumption growth, suggesting that China’s growth momentum could pick up in the year ahead.

·         AUSTRALIA: The RBA left interest rates unchanged at 3% in April, as risks to the global economic outlook moderate and the Australian economy shows tentative signs of a pickup while inflationary pressures remain well contained.  Of particular concern is that national incomes growth stalled in Q4 2012 after growing strongly some years. Of concern is the big slide in corporate profits and profitability, which has contributed to the slide in national incomes.


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