UPDATE REPORT – FEBRUARY 2013

Minerals-related investment is near its peak, all levels of government continue to scale back expenditure, and the Australian dollar remains high. Recognising the resulting weakness, the Reserve Bank is lowering interest rates to stimulate the domestic economy. This is helping support a recovery in dwelling building, which will underpin demand in other industries – eventually. At the same time, the global economy finally appears to be stabilising, but risks remain large and to the downside.

The Long Term Forecast 2012-2027 Update report dissects this outlook, and addresses, among other things, the following questions relevant to Australian businesses:

• When should your industry expect conditions to improve?
• How long will the current labour market softness keep wage and price inflation contained?
• Do low interest rates and a high Australian dollar make now a good time to invest despite low demand?
• When will interest rates start rising again, and how high will they go?
• How will changes to government policy affect businesses?
• What will the Australian economy look like on the other side of the minerals investment boom?
• What are the prospects for a materially lower Australian dollar, and therefore a recovery in manufacturing and other trade-exposed industries?
• What do long-term issues such as rising energy prices and the ageing population mean for growth and the nature of investment in the future?

These questions and more are addressed in the Long Term Forecast 2012-2027 Update report. Our independent assessment and respected forecasts of the timing, nature and strength of the next cycle, shifts in financial conditions and risks surrounding the outlook are essential inputs for annual budgeting, strategy formulation and mid to long term business planning

Joy Xenita

PH: +61 2 8458 4220