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review of 2016, outlook for 2017

looking better despite the political noise

AMP’s Head of Investment Strategy and Chief Economist, Dr Shane Oliver looks back on 2016 – “a messy but okay year” – and at the outlook for 2017 – “looking better despite the noise”.

2016 started badly for investors with worries about global growth and deflation. But global growth turned out okay and, despite political events, rising bond yields and disappointing Australian growth, the end result has been a constrained but okay year for diversified investors.

2017 is likely to see another year of okay and maybe even slightly higher global growth, higher inflation, higher bond yields after a pause and divergent monetary conditions as the Fed tightens but other countries stay easy. The RBA is likely to cut rates to 1.25%.

Most growth assets, including shares are likely to trend higher, resulting in reasonable returns in 2017.

The main things to keep an eye on are US policy under Trump (stimulus v trade wars), the Fed and the $US, bond yields, various European elections, China and the impact of the rising supply of apartments in Australia.

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What you need to know

Source: AMP

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