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The global economic recovery continues, however growth is uneven across regions and there were signs of a loss of momentum in Europe through the September quarter.
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US President Trump stepped up his trade rhetoric ahead of the presidential election with talk of a “decoupling” from the Chinese economy amid a widening trade deficit.
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China is on track to be the first country to exit the pandemic and is the only G20 country with a positive GDP result, recording 3.2% year-on-year for the June quarter.
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The Reserve Bank of Australia kept rates on hold at 0.25% at its September meeting and extended the Term Funding Facility until the end of June 2021.
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From 28 September, Australia’s JobKeeper payments will fall from $1500 per fortnight to $1200, and $750 for those working less than 20 hours per week.
Global economies
The COVID-19 pandemic continues to spread, with data from the World Health Organisation showing confirmed cases were above 27 million at the end of August and rising. Globally, the economic recovery continues following severe contractions in the first half of 2020, but growth is uneven across countries and regions, with fears of a larger second wave dampening hopes of a sustained rebound.
US
Key indicators point to a strong rebound in economic activity, but the outlook remains uncertain with additional aid packages tied up with Congress, which is impacting on consumer sentiment.
Europe
Key economic indicators suggest that Europe’s recovery is losing momentum through the September quarter. Fears of resurgent COVID-19 infection rates, most notably in Spain and Italy, is leading to greater caution from consumers, while the spectre of deflation is re-emerging for the first time since the euro crisis.
China
With only sporadic outbreaks across the country, China is on track to be the first country to emerge from the COVID-19 crisis, and the only G20 country to post a positive GDP result in the June quarter.
Asia Region
Japan’s GDP fell 7.9% in the June quarter, slightly less than the -8.1% expected, marking the third consecutive quarter of contraction and the steepest on record following impacts from COVID-19.
Australia
The Australian economy officially entered a recession for the first time since 1991 as the national accounts showed June quarter GDP fell 7.0% in the June quarter, following a 0.3% fall in the March quarter.
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The information in this Market Update is current as at 11/9/2020 and is prepared by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421445 on behalf of National Australia Bank and its subsidiaries. Any advice in this Market Update has been prepared without taking account of your objectives, financial situation or needs. Before making any decisions based on the content of this document, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness. Past performance is not a reliable indicator of future performance. Before acquiring a financial product, you should obtain and read the corresponding Product Disclosure Statement (PDS) and consider the contents of the PDS before making a decision about whether to acquire the product.