Westpac Market Outlook: December 2024 – January 2025
As we wrap up another year, it’s time to reflect on what’s happened and look ahead to what’s to come. The past year has seen a decrease in price pressures, allowing for more relaxed monetary policies. The major disruptions caused by COVID are calming down, and we can start to see things returning to a more normal state.
Looking forward, we might find ourselves back in a familiar pre-pandemic landscape, with trade policy issues and political challenges dominating the scene. Australia, in particular, may face issues with wages growth and productivity that have plagued policymakers in the past.
In Australia, the recent RBA Board meeting showed a shift in views, possibly leading to earlier rate cuts than expected. While the path ahead for GDP growth may be a bit uncertain, it’s important to keep an eye on key data releases to gauge the situation accurately.
Commodities prices have been on a downward trend, with some exceptions like gold rallying. Westpac is predicting further declines in export prices for the coming year. In global FX markets, the US dollar has been holding strong, but we might see some fluctuations as policies under President-elect Trump become clearer.
New Zealand is expected to continue easing in early 2025, with a potential slowdown in easing post-February. The United States is currently in a strong economic position, but risks remain for growth and inflation. China, on the other hand, is facing headwinds with tariffs and a weak housing market, but continues to expand its productive capacity.
Overall, the outlook for the coming months is filled with uncertainties and challenges, but staying informed and keeping an eye on key developments will be essential to navigate through the changing economic landscape. Stay tuned for more updates and insights from Westpac IQ.
