A look back at the week in economics
A very quiet week on the economic front, however we noted with some interest these various comments provided by Michael Workman, of Commonwealth Research.
IMF talks up world growth (Tues 14/9)
The G10 group of central bank governors painted a relatively bright picture of world growth prospects. The governors were encouraged by signs of firmer growth in Japan and euroland and the absence of global inflation, even in the US.
The IMF managing director, Stanley Fischer, was also talking up the world growth outlook last night.
He defended the $30bn in IMF loans to various economies in the past 2 years. Most of the crisis
economies in Latin America and Asia are now recovering according to the IMF. The latest IMF forecasts revised their world growth estimates from 2.3% to 2.8% for 1999. The 2000 forecast is 3.4%, from 3.3%.
Consumer confidence data points to strong spending…which is definitely not in line with the slowing growth view (Thu 15/9)
Strong consumer confidence data indicates no weakening in the current strength of consumer spending trends. The 4.1% rise in September means that confidence remains near 5 year highs.
There appears to be some reluctance on the part of consumers to buy whitegoods, but that could be due to GST tax changes coming in July. Rising consumer confidence is an important influence if you were contemplating the appropriate level of short term interest rates in Australia.
If you believed that the economy was slowing in to the GST period then the evidence you look for is weaker business investment (that’ s coming) and slower consumer spending (oops, that’ s definitely not in sight yet). As long as the jobs market add full-time jobs at its current rate (which appears likely) and consumers remain confident, then growth will be on the stronger, not weaker, side.