As we walk further into this financial year, let’s take a look back to see what took place during the 2019 – 2020 financial year.

We had the worst bushfire season we have seen

  • Approximately 17 million hectares of land burned
  • 3,094 homes lost and sadly 33 deaths
  • Devastation to our beautiful wildlife

As we walk further into this financial year, let’s take a look back to see what took place during the 2019 – 2020 financial year.

We had the worst bushfire season we have seen

  • Approximately 17 million hectares of land burned
  • 3,094 homes lost and 33 people died
  • Devastation to wildlife

Just as some of our rural communities were getting back on their feet and preparing to welcome visitors to their communities, we faced the concerning realisation that COVID-19 was making its way to Australian shores.

The emergence of COVID-19

Here are some numbers to date (as of August 20):

  • 22.2 million cases globally (24,000+ in Australia)
  • More than 783,000 deaths globally (450+ in Australia
  • An estimated 3.5 million Australians filed for JobKeeper at a cost of $70billion
  • According to the RBA, unemployment was expected to peak at 10% in the June quarter (thankfully, it did not).
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While the above numbers may seem shocking, Australia has avoided both a health and economic catastrophe. Life pre-COVID-19 almost seems difficult to remember, although it certainly wasn’t all doom and gloom for Australia. Over the past 12 to 18 months it’s important to reflect and appreciate the economic position we were in before COVID-19 hit. Consider these numbers –

Gross Domestic Product (GDP)

A measure of Australia economic growth was as follows:

  • Jan-Dec 2019 GDP – 2.2%
  • Jan-March 2020 GDP – 0.3%
  • March 19-March 2020 GDP – 1.4%

Australia’s Budget

In December 2019, the Government was on track to deliver the country’s first budget surplus in a decade, of between $5-7billion.

Employment

In 2019, the unemployment rate was 5.18%, almost a 10 year low (in 2011 it was 5.08%)

Market Returns

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Oil price goes negative

As the global economy shut down, the demand for oil greatly reduced and the oil price followed. This left a huge surplus on the market and no buyers, thus, some holders of oil futures were willing to pay others to offload contracts for oil they would be unable to store, which actually saw a negative price per barrel for a short period. Storage capacity on land has filled up quickly and some have resorted to storing oil by sea, paying up to $100,000 per day to lease tankers for storage purposes.

After briefly dipping to -$37, the oil price has since recovered to around $39.

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The year ahead

It seems like a realistic point of view to see that economies are never as good as they seem, and never as bad as they are predicted to be. In Australia, we have dodged a bullet economically. The Government has shown a commitment to rescuing the Australian economy from financial ruin and we are seeing further stimulus being provided to see us through this challenging period. 

Considering we have had two consecutive quarters of GDP decline, we are in a recession, but are we heading for a great depression? Definitely not.

If we could take anything from the United States it is their confidence and optimism in recovering from a challenging time. COVID-19 has a tighter grip on them, however, the US stock market just notched its best quarter in decades, gaining 17.8%.

We are amongst tough times, but having a lack of confidence is not going to help us to recover from adversity. We have to stay resilient, persevere, and continue to work hard- times are tough, but we are pulling through.

https://www.pgaadvisory.com.au/ “Economic Review”

Brought to you by David Philipsen of Parker Finance

www.parkerfinance.com.au

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