Staying out of recession

By Dale Gillham. Published at Dec 4, 2020, in Investor 101

The economic rollercoaster for 2020 continued this week with the announcement that GDP had grown by 3.3 per cent in the September quarter, which officially ended the recession that only started at the end of the prior quarter.

While this is great news, activity in the economy is still down on pre-COVID-19 levels and down 3.8 percent for the year to the end of September; so while the news is good, we are not out of the woods just yet.

With the exception of Victoria, easing restrictions around Australia resulted in household spending rising by 7.9 per cent in the September quarter.

There was also more spending on services, such as hotels, cafes and restaurants up nearly 10 per cent in the last quarter.

Now Victoria is out of lockdown, it will be interesting to see if these economic numbers continue in the December quarter or whether the increased spending is just a short-term reaction.

Right now, the world is looking at Australia and how we have handled the pandemic from both a health and economic standpoint, however, the road forward may not be smooth sailing, as tensions continue to rise with our biggest trading partner China.

These tensions bring both challenges and opportunities although it is still too early to tell how the Australian market and the economy will respond.

If Australia is to stay out of a recession and continue to grow, we need China’s help.

That said, most Australians would want our Government to stand tough and protect our interests, as we need to look after our long-term future rather than sacrifice it for short-term gains.

The Australian government also needs to continue to support and stimulate the economy, because while the economic news is good, it has been driven by stimulus packages and we are a long way from getting our economy growing under its own steam.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online at www.wealthwithin.com.au


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