CBA expects rebound in confidence
Mr Narev said that since August, developments in major areas of concern in the global economy - European Union stability, US recovery and China's ongoing growth - had been positive overall. This had generated a period of relative stability, which had a positive effect on global equity and debt markets.
There are still reasons to be cautious, such as the lack of a sustainable long-term plan to resolve sovereign debt in Europe and the fragility of the US economic recovery.
"However, if the current stability continues, we believe it will translate into a slow but steady rebuilding of consumer and business confidence in Australia, and that is our base case for the 2013 calendar year," Mr Narev and Commonwealth Bank chairman David Turner said in a newsletter.
The bank's stockbroking arm, Commonwealth Securities, said 2013 should be a normal and less volatile year. "The problems have not all been solved, but there is a greater determination by policymakers and politicians to deal with issues quickly and move on," CommSec said in the newsletter.
CommSec expects the global economy to grow about 3.5 per cent, up from 3.3 per cent last year. Europe, labouring under high budget deficits, would take some time to generate economic growth.
Frequently Asked Questions about this Article…
Yes — Commonwealth Bank chief executive Ian Narev and chairman David Turner say their base case for 2013 is a slow but steady rebuilding of consumer and business confidence in Australia if the global economy remains relatively stable.
The bank points to positive developments since August in European Union stability, signs of a US recovery and China’s ongoing growth — factors that have created a period of relative stability and helped global equity and debt markets.
The article highlights two key risks: the lack of a sustainable long-term plan to resolve sovereign debt in Europe and the fragility of the US economic recovery, both of which are reasons to remain cautious.
Commonwealth Securities (CommSec) expects 2013 to be a more normal and less volatile year for markets, noting that problems haven’t all been solved but there’s greater determination by policymakers and politicians to tackle issues quickly.
CommSec expects the global economy to grow about 3.5 percent in 2013, up from roughly 3.3 percent last year, while noting that Europe will take time to generate stronger growth due to high budget deficits.
According to the bank, the recent period of relative stability has had a positive effect on global equity and debt markets, driven by improved outlooks in the EU, US and China.
Everyday investors should watch ongoing developments in European sovereign debt resolution, the strength and durability of the US recovery, and China’s growth — because continued global stability is central to the bank’s expectation of a confidence rebound.
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