Mixed global outlook

The latest Deloitte Access Economics Business Outlook reports that while Australian resource businesses have rapidly increased their outputs, a consequential fall in demand has impacted commodity and energy prices negatively.

However, Australian exchange rates and interest rates have fallen quickly, which combined with low wage growth means the post-commodity boom is a "soft landing" rather than a "dramatic bust" – a good result, says Deloitte.

In terms of the global economy, the quarterly report found that while Europe and Japan "still have some dramas to navigate", the US economy is heading upwards and interest rates are almost definitely set to rise. However, global growth remains sluggish, mainly due to the slowdown in emerging economies, notably China.

For inflation, the key components of demand, labour costs and import prices are said to be relatively static, with only import pricing a possible threat to increasing inflation.

The balance of payments has been negatively affected by falling commodity prices but positively affected by lower interest rates, reducing the cost of foreign borrowings. The report says that this may result in an inflection point when global interest rates commence rising (and implicitly the balance of payments deteriorates), perhaps as early as 2016.

Job growth has been accelerating as a result of lower interest rates and lower exchange rates. Deloitte states that: "Record low wage growth has combined with improving productivity to make Aussie workers more competitive than they were – meaning that a given amount of economic growth is driving more job gains than it usually would."

For more information, visit the Deloitte Access Economics website.