Daily Commentary BY THE CURVE TEAM –

Uncertainties Continue

14th of October, 2020

Domestic politics headlines a raft of current uncertainties impacting the economy.

NSW premier Gladys Berejiklian has been embroiled in a corruption scandal.  Although she is not being accused of any explicit misdemeanours, her association with other corrupt MPs means she is facing a no confidence vote in parliament.

Similarly, Victorian premier Daniel Andrews is facing a no confidence vote following the perceived botched management of the hotel quarantine. At a time when there is a greater onus on the government to stimulate the economy, this uncertainty is unwelcome.

Curve’s monthly economic insights released yesterday flagged a number of domestic uncertainties that will be downside risks for the economic recovery. In addition to Australia, the global economy also faces many uncertainties.

Progress on Britain-EU trade talks has been at a snail’s pace. EU-US trade relations revived a sore point yesterday as the World Trade Organisation (WTO) allowed the EU to levy tariffs on $4 billion worth of US goods.

The ruling was in relation to the EU and US supporting Airbus and Boeing respectively with measures that are not allowed by the WTO. It follows a ruling last year that allowed the US to impose tariffs on $7.5 billion worth of EU goods, which US president Trump made the most of.

Domestically in the US, stimulus talks continue to lack progress, despite the Democrats and Republicans being closer in terms of the volume of stimulus. Doubts continue to grow that an agreement won’t be reached until after the election in early November.

All these uncertainties will weigh on a global economic recovery, especially through its impact on confidence. Today, Australia’s consumer confidence for October will be released. This will be a closely watched data piece over the next 6-12 months given the uncertainties present in the economy.

Josh Stewart

Client Relationship Manager