Economic Wrap

The raft of economic data released over the past few weeks confirms the view that

Australia remains one of the strongest developed countries in the world a position that has been bolstered by the latest GDP figures.

According to the Australian Bureau of Statistics (ABS), GDP grew 1.2 per cent over the June quarter following an upwardly revised 0.7 per cent increase in the previous quarter.

The results were labeled "outstanding" by the federal government.

Other recently released ABS figures showed slow but steady growth in retail sales, building approvals and house prices.

Shoppers splurged more than $20 billion in July 0.7 per cent more than in June.

The outlook for the housing industry has also improved, with building approvals rising 2.3% in July the first increase in four months.

While the latest figures no doubt show that the Australian economy is currently faring well, it was not enough to persuade the Reserve Bank of Australia (RBA) to lift rates.

At the board meeting conducted early September, RBA governor Glenn Stevens said keeping the official cash rate at 4.5% was appropriate "for the time being".

Mr Stevens said despite the fact that the Australian economy was clearly going from strength to strength, the global outlook remained uncertain.

The global economic recovery since the severe recession of 2008- 2009 has been artificially boosted by a massive monetary and fiscal stimulus, and the backstopping and bailout of the financial system.

But the fundamental excesses that led to the crisis too much debt and leverage of the private sector have not been addressed as the private sector deleveraging has barely started.

As such, fears are mounting that some countries, including the US and Japan, could double-dip into recession.

Moving forward, the RBA will be forced to weigh up the uncertainty plaguing foreign countries like the US against Australia's positive outlook.

Nomura Australia Chief Economist Stephen Roberts said he would expect international problems to take precedence over the national outlook, and believes the RBA will keep rates on hold for the rest of the year. Other economists are factoring in at least one hike before the year is out.

If you're concerned about how the current rate environment may impact your mortgage or your home buying plans please feel free to contact us on (08) 9381 8311 or via email contact@allaboutyoufinance.com.au.

Check out our website at Mortgages Perth from All About You Financial Solutions

Economic Wrap

By: Gemma Roberts

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