It was similar with the global economic recovery, with growth indicators in western economies slowly improving over the fourth quarter. The Organisation for Economic Cooperation and Development (OECD) forecast Australia’s gross domestic product (GDP) will grow 3.4% this year;1 above the 3% growth forecast for the US, but below the 5.1% forecast for emerging markets.
As the global economic recovery and associated bull run on world share markets moves into 2010, investors are asking what’s next?
While the global and local share markets have rebounded from their March lows, there is still a fair way for them to go before they reach the levels they were at before the global financial crisis struck - they are still some 30% below those highs.
How central banks around the globe withdraw their stimulus measures will be key to how long economies and share markets take to regain their previous highs. The Reserve Bank of Australia hiked interest rates every month of the December quarter.
Taking a long-term investment approach, over the past decade, Australia posted the best performance of developed world share markets with a 10 year US$ total compound annual growth rate of 12.7% a year over the noughties.2 The big question is will Australian investors continue to be so fortunate this decade?
Fidelity InternationalAll data from Bloomberg unless otherwise mentioned.1 CLSA Asia-Pacific Markets as at 21 December 2009. 2 JP Morgan Research as at 4 January 2010. FIL Investment Management (Australia) Limited (ABN 34 006 773 575, AFSL No. 237 865) (“Fidelity Australia”) is a member of the FIL Limited group of companies known as Fidelity International. Fidelity Australia is not responsible for any other material within this document and the views expressed therein are not necessarily the views of Fidelity Australia. © FIL Investment Management (Australia) Limited 2009.