Australians more positive than expected
WAYNE Swan has long warned against talking the economy down. The end of the mining boom, lacklustre consumer confidence and a bumpy global economy have all weighed on local sentiment.
"Endless pessimism is in itself a risk to the global recovery, just as it weighs on business and consumer sentiment in Australia's economy," he said last week.
But the federal Treasurer may not need to worry. Turns out Australians are positive, with two in every three believing the country has a bright economic outlook, according to a new Westpac report and Australia Day survey.
Of those optimists, another two-thirds believe the positive outlook will persist for the next five years, bolstered by our resources industry and proximity to the fast-growing Asian region.
"The survey really shows us that Australians are a lot more positive than perhaps they have been portrayed by certain commentators in the market," Westpac's general manager of retail banking, Gai McGrath, said.
In keeping with the growing positivity, Australian shares hit a fresh 20-month high on Thursday, closing above 4800 for the first time since May 2011. The benchmark S&P/ASX 200 Index added 22.4 points, or 0.5 per cent, to 4810.2, while the broader All Ords jumped 21.7 points, or 0.5 per cent, to 4833.8.
Recent data from Beijing has also alluded to a steadier economic outlook for China, Australia's largest trade partner. On Thursday, a preliminary reading of HSBC's purchasing managers index showed China's manufacturing was expanding at its fastest rate in two years.
But the International Monetary Fund said the unexpectedly stubborn eurozone recession and weakness in Japan would continue to weigh on global economic growth this year before a rebound in 2014.
The IMF trimmed its 2013 forecast for global growth to 3.5 per cent from the 3.6 per cent it projected in October, but said it looked for expansion of 4.1 per cent in 2014, provided the recovery in Europe takes hold.
"Optimism is in the air, particularly in financial markets, and some cautious optimism may indeed be justified," the IMF's chief economist, Olivier Blanchard, said.
Respondents to the Westpac survey also showed a strong preference to investing in residential property and shares, over term deposits or savings accounts. Thirty per cent picked property as the best value-for-money investment option in Australia.
Ms McGrath said Australians were increasingly aware of the importance of diversifying risk in an investment portfolio, and with interest rates relatively low, customers were increasingly considering investing in the sharemarket. "I think it goes through different cycles," Ms McGrath said. "People are talking about real estate as being the best value for money. I don't think people would have been saying that five years ago when we had a big real estate boom and people couldn't find real value."
The Westpac survey, which canvassed 1000 people, found 37 per cent listed saving more as their top financial priority for the year ahead, followed by making a personal budget and paying off the mortgage.