But I do think some of the more optimistic scenarios that are being painted for 2010 are overdone. The picture for 2010 is looking brighter than what it did a year ago (could it have looked bleaker?), but Australia is far from being out of the economic woods. Indeed, some of the solutions used to avoid a deep recession in the wake of the global financial crisis could be some of our future problems.
So, what does 2010 have in store?
Inflation will rise and the Reserve Bank of Australia (RBA) will use an aggressive monetary policy to keep this genie in the bottle. As such, I expect further interest rate movements in the months ahead, with the bank erring on the side of caution by pushing up rates to ensure we don't return to the inflationary decades of the 1970s and 1980s.
At the same time, the central bank will be sending a message to Canberra that it will want to see strong evidence that government spending is being cut as the economy picks up. This will make the next budget a critical document for the message it sends to the markets and the RBA.
No doubt Canberra will want to start cutting spending; Australians are economically literate enough to know such budget deficits are not sustainable in the long term and will want to see evidence that government outlays are being wound back. Credible economic management is a key factor in why governments win office, and state and federal budget deficits are now at very high levels.
However, Canberra's desire to run a tighter fiscal policy could bring it into conflict with what the Australian public is looking for in the next term of government. Traditionally, governments like to loosen the purse strings in an election year, but in this environment the government will have little or no capacity to do this. It will make for a very interesting campaign, with fiscal responsibility possibly being the key election issue, especially if the economy keeps improving.
A growing economy will certainly help the government. In this respect I think events in Asia will play in its favour. China and India, as well as their smaller Asian brethren, look poised to enjoy stronger economic growth in 2010, and this will underpin commodity prices, which I predict will increase.
Expect India, in particular, to play a bigger role in the Australian economy, and not just in what raw materials we ship to the world's second most populous country. The ties that bind - sporting, historical, language and political system - will absorb the inevitable hiccups in the relationship and India will emerge as one of our key trading and business partners.
The downside, of course, of the RBA maintaining a tight monetary policy and strong commodity prices will be a high Australian dollar that will still trade in a wide band as commodity markets and interest rates swing. Although it might test parity with the greenback, over 2010 it might actually trade at a much lower level.
Predicting share markets is fraught with danger. Not many analysts would have predicted the strength of equity markets in 2009; at the end of 2008, those bears were everywhere. I'm not expecting this year's gains to be repeated, and I think those who are genuinely concerned about equities can mount solid arguments to support their case during 2010.
Finally, the superannuation industry is likely to experience big changes in 2010. Three reviews are due to be tabled (Harmer, Henry and Cooper) and the government will have to act. Expect a tougher regulatory regime.
This may actually come in a higher cost environment and amid numerous tax changes. It certainly means in the lead-up to 2010, fund trustees will undoubtedly be planning for numerous scenarios and market trajectories.
Australian investors face a dual challenge this year: seeking returns in a low-rate environment, and protecting their portfolios from the on...