Global growth is set to continue for 2020 but modestly, with Australian shares to be constrained to around 9% as the bushfire disaster drags the economy, according to AMP Capital.
AMP Capital head of investment strategy and chief economist, Shane Oliver, said there would be a rebuilding boost in relation to the bushfires but there was an increasing risk that because they were so widespread and had been going on for so long, it would lead to a noticeable negative disruption to economic activity.
“[The bushfires] will increasingly weigh on the national psyche further depressing consumer spending as Australians feel even less motivated to spend when their fellow Australians are suffering,” he said.
“The bushfires will only add to the pressure for more Reserve Bank of Australia (RBA) easing and Federal fiscal stimulus – with the latter initially coming in the form of help for affected communities.”
Oliver said a slight rise in yield through the year were likely to result in low bond returns, and unlisted commercial property and infrastructure were likely to continue benefitting from the search for yield. However, the decline in retail property values would still weigh on property returns.
Cash and bank deposits were likely to provide very poor returns with the RBA expected to cut the cash rate to 0.25%.
While share markets experienced a strong start to the new year, gains were somewhat reversed as tensions escalated...