The new consumer environment filled with caution is here to stay according to Westpac CEO Gail Kelly. She urged businesses to brace for a prolonged period of sluggish growth, low interest rates and cautious consumers. This prognosis appears reasonable, given the credit boom of the last 2 decades was driven by structural factors such as a deregulated financial market, baby boomers moving to their peak earnings period and low interest rates. Household debt has now stabilised at a high level and the savings ratio has risen back to historically higher levels. To compound this, Australia's workers to dependents ratio likely peaked in 2010, with an aging population a further drag on the economy. (VIEW LINK)
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