1. Economic update
Australian Institute of Company Directors
The Essential Director Update: 13
Steven Shepherd
Senior Economic Advisor
Grant Thornton Australia
© 2013 Grant Thornton Australia Ltd. All rights reserved.

2. Global economic trends
Annual GDP growth rates (December quarter on December
quarter)
12
10
8
6
Only 4 OECD economies
never entered a GFC-induced
recession including Australia
(also China and India).
2010
2011
2012
4
2013 (f)
2
0
Australia Canada Germany
-2
New
Zealand
© 2013 Grant Thornton Australia Ltd. All rights reserved.
UK
USA
China
India
Euro
area
G7
Total
OECD

3. Confidence trends across the Australian economy
Corporate sector
(ASX 300 Quarterly Business Survey: June 2013 - NAB Monthly Business Survey: August 2013)
•
Business confidence weakened across the economy (June 2013)
•
NAB Monthly Business Survey: September 2013 Survey rose to highest in nearly three and a half
years
SME sector
(Sensis Business Index: survey of 1,800 SME's across Australia in September 2013)
•
SME business confidence fell further during September
•
Lack of work is the biggest barrier to taking on new employees
Consumers
(Westpac/Melbourne Institute of Consumer Sentiment: survey of 1,200 consumers in October 2013)
•
Consumer sentiment fell back somewhat in October, after a 4.6% jump in September
•
The survey was conducted around one month after Federal Election – still 9.2% above 12 months
ago
© 2013 Grant Thornton Australia Ltd. All rights reserved.

4. US unemployment rate and quantitative easing
12.0
QE1: December
2008 - June 2010
QE2: November
2010 - June
2011
November 2010:
FED - $600B
program through to
2Q 2011
10.0
QE3: From
September
2012
September
2012:
FED - $85B a
month
19 June 2013
- QE U/R
target
7%
- INF: 2%
- GDP: 2.3%2.6%
%
November 2008:
FED announces a
program of $800B
6.0
4.0
Unemployment
rate
© 2013 Grant Thornton Australia Ltd. All rights reserved.
2…
2…
2…
2…
0.0
2…
2.0
2…
8.0

5. Key economic projections
•
The Australian dollar is 90 cents against the US$ (±5%)
– expected to ease over the medium term
•
RBA Cash Rate – 2.5%
– it is believed this will be cut by 25 basis points in next three months and will rise again in 2014
•
Australian economy
– currently at 2.6% growth and projected growth in 2014/15 is 3%
•
USA Economy
– QE3 = >10% of US Money Supply (M2 - growth accelerating)
– US GDP will rise from 2.5% during 2014
– US federal funds discount rate will rise from (effective) 0.08% in 2014
•
Chinese Economy
– GDP growth to >7.5% in 2013 (China Central Bank)
– industrial activity >10% which shows robust growth
© 2013 Grant Thornton Australia Ltd. All rights reserved.