Laminar Capital’s Stephen Roberts gives his insights the the Sydney Morning Herald
Recessions can creep up on you, according to the chief economist at Laminar Capital, Stephen Roberts.
“Often you don’t know until it’s too late. By the time you get those two sets of GDP numbers with negative growth, you can be a far way down the track to recession. It was the issue last time around. It took a long time for people to realise we were in recession. It was the same in the early 1980s as well.”
Roberts puts the chances of a recession in the next 12 months at between 35 and 40 per cent, up from 25 per cent before he saw Wednesday’s national accounts.
Such meagre growth could easily turn into no growth at all. And the warning signs are there, says Roberts.
Not only is China’s growth slowing, it is becoming less resource hungry as the drivers of growth shift from construction to domestic consumption.
Australian home values – a key support for household spending – are also “highly exposed” to any reverse in the tide of incoming foreign investment, warns Roberts.
“Normally we don’t think there’s a problem with the housing market until the unemployment rate goes up. In this particular housing cycle, there has been been a significant contribution from overseas investors. There is an increasing risk that tighter and tighter capital outflow controls will be imposed [as Asian countries seek to prop up their currencies].”
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