Despite high levels of global debt there are signs of light at the end of the tunnel, according to the chairman of business research house IBISWorld, Phil Ruthven.
Although the world's G20 nations account for 77.5 per cent of global debt they are mostly able to service this debt with a small share of taxes at the expense of social benefits, Ruthven said. The problem is Portugal, Ireland, Italy, Greece and Spain, but together they account for just 7.5 per cent of world debt – not really enough to wreck global markets, he said.
But the Australian economy should perform reasonably well this year, with the mining, infrastructure (engineering and construction), health, telecommunications, finance, professional services and the new information industries providing plenty of momentum to offset the slower industries such as manufacturing, agriculture and hospitality, he said.
The Australian share market could even be poised in 2012 to take a big leap in 2013, with profits again on the rise and the price-earnings ratio coming off a subdued level in 2011. This all leaves room for a spectacular jump when confidence returns to London and New York – from where Australia takes its lead, he said.
There is still a lot of upside available, perhaps as much as a 50 per cent rise in the All Ords in the next few years, according to Ruthven.
The Australian economy would benefit from having a stable, more commercially realistic and far-sighted government and a better industrial relations scene, but these might emerge in the not too distant future, he added.
