Australian Economic Outlook

Australia was in line with the world economy, slowly rising its interest rates, specifically in long end, weakening AUD, further commodity rice declines and another decline of 10% in terms of trade.

There was continuous impact of China on Australia through different channels like resources, services exports, capital inflows. As commodity supply glut adjusted with weak demand conditions, the focus will slowly be taken away from resources link to focus on services and capital inflows.

Australian property market stabilised. The offshore investment demand in both residential and commercial property rose from early 2015.

Reserve Bank of Australia wary the commodity cycle impact, encouraged by good job growth, held rates unchanged for the entire year. The markets started to notice some stability in commodity markets, prospects for eventual rate hike in Australia strengthened in H2, with most likely timing in mid-2017.

"As we enter 2017 we are encouraged by some stability in commodity markets and housing markets. The 10% fall in the AUD over the year has further boosted services exports and foreign investment in Australia's housing; commercial property and farm sector is cause for optimism. Nevertheless, the gap between WA/ regional Qld and the south east remains very wide", says Westpac in a research note.