Russell predicts better end to 2009

Russell Investments has used its latest Australian Market Barometer to predict a dismal economic outlook for the first half of this year but to predict an improvement in conditions in the second half.

The Barometer, released today, said it was difficult to imagine a more dismal global economic environment than that confronting investors at the beginning of this year but, offsetting this, a massive policy response was underway and there were signs that credit market conditions were stabilising.

As well, the Russell analysis said Australia was doing better than many other economies.

It said while the outlook for the Australian economy had deteriorated over the past few months, there were reasons to expect the downturn in Australia would be milder than elsewhere.

“Fortunately, there is still plenty of fiscal and monetary policy ammunition available,” the analysis said.

It said Australia’s main banks were also in better shape than their global peers.

The Russell analysis said while last year had been horrific for investors and 2009 was starting with deeply pessimistic sentiments, financial markets were forward looking and had priced in a lot of the bad news.

It said equity markets should rebound from deeply discounted levels, but the range of possible outcomes was wide.

The analysis concluded that after enduring a painful 2008 investors should find 2009 more rewarding.