From PIMCO’s Robert Mead:
After 25 years of steady economic growth, Australia is on the verge of wresting bragging rights from the Netherlands for the longest period on record without a recession. While this historic event should be celebrated, the future may not be as rosy.
PIMCO’s base case calls for Australia to keep growing moderately over the next three to five years, in a range of 2% to 3%, with inflation well contained in the 1.5% to 2.5% range. On a positive note, Australia’s sovereign balance sheet is relatively healthy, and its credit rating was recently affirmed at ‘AAA’ by Standard & Poor’s. But if there is any hint of a downturn in developed markets, or if China migrates toward a worse-than-expected outcome, the resilience of the Australian economy over the next three to five years will be extremely challenged.
