The RBA notes that the global trade environment has became slightly less volatile with the US-China Trade War on a truce and the likelihood of a ‘Hard Brexit’ assessed as significantly less likely. However, the long-term effects of the trade war and the subsequent weak investor confidence means that global trade and global growth have both remained weak. This is problematic for Australia, whose performance is heavily tied to global commodity prices, which are influenced by global growth rates. The effects of Australia’s slowdown in growth to 1.7% is particularly evident in China, where 30% of our exports go. All Chinese economic indicators slumped despite the government pursuing aggressive expansionary fiscal policy. Globally, major developments have also occurred such as the victory of Boris Johnson and the Conservative Party in UK’s 2019 election, and the signing of the Phase One Trade Deal between China and the US. This has decreased some of the uncertainty in the global economy, and will hopefully lead to higher global growth, from which Australia will inevitably benefit.
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