a global economic and market outlook
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A Global Economic and Market Outlook. Presented by Chris Caton 20 March 2007. Oil Prices (West Texas) in $US/bbl. Source: Datastream. Oil Prices (West Texas) in $A/bbl. Source: Datastream. Petrol Prices relative to CPI. Source: ABS. US Housing starts and Permits. (Millions). - PowerPoint PPT PresentationTRANSCRIPT
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Presented by Chris Caton20 March 2007
A Global Economic and Market Outlook
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Oil Prices (West Texas) in $US/bbl
Source: Datastream
0
10
20
30
40
50
60
70
80
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
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Oil Prices (West Texas) in $A/bbl
Source: Datastream
0
20
40
60
80
100
120
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
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Petrol Prices relative to CPI
Source: ABS
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06
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US Housing starts and Permits
Source: Datastream
1
1.2
1.4
1.6
1.8
2
2.2
2.4
96 97 98 99 00 01 02 03 04 05 06 07
Permits Starts
(Millions)
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US Construction Spending
Source: Datastream
-15
-10
-5
0
5
10
15
20
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
Year-to growth
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Total US Non-farm Employment
Source: Datastream
-0.8
-0.4
0
0.4
0.8
1.2
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
3mth / 3mth chg
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US CAD % of GDP
Source: Datastream
-1
0
1
2
3
4
5
6
7
8
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
%
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2007 Growth Forecasts (%) Month of Forecast
A-06 S-06 O-06 N-06 D-06 J-07 F-07
Australia 3.3 3.4 3.3 3.2 3.0 2.9 2.9
New Zealand 2.1 2.0 1.9 1.9 2.0 2.1 2.3
US 2.7 2.6 2.6 2.5 2.3 2.4 2.7
Japan 2.2 2.2 2.2 2.0 2.0 1.8 1.9
China 9.0 9.1 9.1 9.3 9.5 9.6 9.7
Germany 1.1 1.2 1.2 1.3 1.5 1.5 1.7
UK 2.4 2.4 2.4 2.4 2.4 2.5 2.6
“World” 3.1 3.2 3.2 3.2 3.2 3.2 3.3
Source: Consensus Economics
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Real GDP growth in Australia and the US
Source: Datastream
-4
-2
0
2
4
6
8
10
80 82 84 86 88 90 92 94 96 98 00 02 04 06
US Australia
Year to % change
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The Labour market
Source: ABS
7500
8000
8500
9000
9500
10000
10500
89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
4.4
5.5
6.6
7.7
8.8
9.9
11000’s %
Employment (LHS)
Unemployment Rate (RHS)
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Australian Inflation
Source: ABS
-1
0
1
2
3
4
5
6
7
8
9
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Headline CPI Underlying inflation
%
BT Forecasts
GST Effect
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Terms of Trade
Source: ABS
70
75
80
85
90
95
100
105
110
115
120
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06
Index
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A long-term look at prices
REAL BASE METAL PRI CES*
40
60
80
100
120
140
160
180
200Ja
n-5
7
Jan
-61
Jan
-65
Jan
-69
Jan
-73
Jan
-77
Jan
-81
Jan
-85
Jan
-89
Jan
-93
Jan
-97
Jan
-01
Jan
-05
Jan
-09
IND
EX
* BASE METAL PRICES RELATIVE TO OUTPUT PPI (US$)
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Housing Approvals
Source: ABS
4000
6000
8000
10000
12000
14000
16000
18000
20000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
units
Building Approvals
Housing finance approvals for new and newly-constructed homes
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Investor Borrowing for residential property
Source: ABS
0
1
2
3
4
5
6
7
8
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
$bn
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Ratio of Australian house prices to GDP
Source: UBS
0.8
0.9
1
1.1
1.2
1.3
66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06
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Gross Domestic Product
Source: ABS
-3
-2
-1
0
1
2
3
4
5
6
7
8
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
Qtly growth Year-to growth Non-farm year-to growth
%
BT Forecasts
GST Effect
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Now(16 Mar)
End-Jun2007
End-Dec2007
AUD/USD 0.789 0.75 0.75
Official cash rate (%) 6.25 6.25 6.25
10 Year Bond yield (%)
5.62 5.80 5.80
ASX 200 5830 6000 6200
Financial Market Forecasts
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The Australian Dollar and US Trade Weighted Index
Source: Datastream
62
78
93
109
124
140
00 01 02 03 04 05 06 07
0.4
0.5
0.6
0.7
0.8
0.9Index AUD/USD
US TWI inverted (LHS)
AUD/USD (RHS)
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US and Australian P/E Ratios
Source: Datastream
5
10
15
20
25
30
35
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
S&P 500 Australian Total Market Index
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Australian Sharemarket Performance – ASX200
Source: Bloomberg
1500
2000
2500
3000
3500
4000
4500
5000
5500
6000
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
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Source: Consensus Economics
GDP Consumer PricesAustralia 3.2 2.7United States 3.0 2.4New Zealand 2.8 2.5Canada 2.7 2.0Spain 2.5 2.7Sweden 2.5 1.9Norway 2.5 2.1United Kingdom 2.3 2.0Netherlands 2.2 1.9France 2.1 1.8Japan 1.9 1.3Eurozone 1.9 2.0Switzerland 1.8 1.4Germany 1.6 1.7Italy 1.5 2.0
Global Medium-Term Economic Growth and Inflation Prospects (2006-2016)
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Asia-Pacific Medium-Term Economic Growth and Inflation Prospects (2006-2016)
GDP Consumer PricesChina 8.6 3.2India 7.3 4.5Indonesia 5.8 6.2Singapore 5.5 1.4Malaysia 5.3 3.0Thailand 4.7 3.5South Korea 4.6 2.5Hong Kong 4.6 2.8Taiwan 4.1 2.0Australia 3.2 2.7New Zealand 2.8 2.5Japan 1.9 1.3
Source: Consensus Economics
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Morgan Stanley Capital Indexes
Source: Datastream
600
780
960
1140
1320
1500
1680
1860
2040
2220
2400
99 00 01 02 03 04 05 06 07
100
130
160
190
220
250
280
310
340
370
400Developed Index Asian Emerging Markets Index
Asian Emerging Markets Index (RHS)
World Developed Index (LHS)
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Summary World economic growth remains good . The risk is that the
US slows more than expected.
6-10% gains in international shares likely in next 12 months.
Australian economy is still doing well.
The November rate rise may have been the last.
House prices are going nowhere fast.
The exchange rate is still a two-way risk.
Australian market likely to perform on a par with overseas.
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Disclaimers
The information in this presentation is general only and does not take into account your particular investment objectives or financial situation. Before making an investment decision you should consult a financial adviser. The information is given in good faith and has been derived from sources believed to be accurate. However, no member of the BT Financial Group gives any warranty of reliability or accuracy nor accepts any responsibility arising in any other way including for negligence. This disclaimer is subject to any contrary provisions of any applicable legislation. An investment in any fund described in this presentation is not a deposit with or any other liability of Westpac Banking Corporation ABN 33 007 457 141. None of Westpac Banking Corporation or its related entities guarantee the capital value or investment performance of any fund. Unless stated otherwise, BT Financial Group is the source of all charts, performance information and other data. Past performance is not a reliable indicator of future performance.
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