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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General

A pick-up in non-mining investment is the key to restoring trend economic growth, but to date investment housing seems to be the only clear winner. This is because businesses have been reluctant to accelerate investment plans due to excess capacity and weak forward orders.

Enter the Federal Government’s new accelerated depreciation arrangement for small businesses, recently announced in the Budget. This has the potential to increase expenditure on plant and equipment and thereby change (stimulate) business investment plans, but even though for FY16 the marginal expenditure could be as high at $2.8bn, this amounts to a mere 0.2% of GDP.

For this reason, the RBA will need to maintain an easing bias and the market agrees with one further 25 basis point rate cut still partially factored in.

In offshore news over the weekend, the Greek saga continues. German Chancellor Merkel and other EU officials told Greek PM Tsipras that there could be no bailout deal without IMF approval.  Last night, the Greek Interior Minister Nikos Voutsis told Greek TV station Mega that Greece will be unable to meet pension and wage bills in June and also reimburse money owed to the IMF without a bailout deal with creditors. Greece owes €1.2bn to the IMF in June, in four €300m instalments between June 5 and June 19.

National Beef Update

Released today, the Ag Answers National Beef Update provides producers and industry with a state-by-state analysis of the Australian beef sector. View the report here.

Source: Rural Bank

 

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