Wealth strategies update

Seven reasons Australia is likely to avoid recession from Trump’s shock

The old saying used to be that “when the US catches a cold Australia catches the flu”. In other words, US economic downturns lead to even bigger downturns in Australia. Fear of downturn or even recession here has risen on the back of President Trump’s tariff or trade war with the rest of the world including ourselves. This has been accentuated by the plunge in share markets, although they have yet to see closing peak to trough falls of 20% or more signalling a bear market which often can be associated with recessions. Several forecasters are already forecasting a US recession, and some are warning of a global recession. To be sure Australian growth is at risk as US and global economic activity deteriorates leading to less demand for our exports, lower commodity prices and a negative impact on confidence. The latter is already evident in a sharp fall in consumer confidence and anecdotal evidence points to weaker home buyer enquiries in the last few weeks. However, there are several reasons why Australia should be able to avoid a recession. Read more below.