February is here and hopefully an end to January’s record-breaking heat across the country. There has also been a lot of heat on the global economic stage. The US shutdown may have ended but the trade war between the US and China continues.
There are also further signs the global economy is weakening. The World Bank predicts growth of 2.9 per cent in 2019, down from 3.0 per cent last year and 3.1 per cent in 2017. China’s economic growth slowed to 6.6 per cent in 2018, the lowest in 28 years but still a remarkably strong compared with developed economies.
In Australia, easing inflation also points to a slowing domestic economy. The Consumer Price Index (CPI) – the main inflation gauge – rose 0.5 per cent in the December quarter but eased from 1.9 per cent to 1.8 per cent on an annual basis. One of the major price falls was petrol, down 2.5 per cent over the quarter. According to the Australian Institute of Petroleum, the national average price for unleaded fuel fell 10.7 per cent in 2018, although it crept up to six-week highs of $131.8c a litre in January. Despite lower prices, consumers and business remain cautious. The Westpac/Melbourne Institute survey of consumer sentiment fell 4.7 per cent in January to 99.6 points, a 16-month low. The NAB Business Confidence index also dipped in December, from 3.4 points to a 3-year low of 2.8 points. Unemployment fell from 5.1 per cent to 5.0 per cent in December. The Aussie dollar jumped on the final day of the month to close at US72.7c, up from a January low of US68.7c.