The Australian economy continues to be influenced by falling commodity prices, with terms of trade declining in the December quarter, says Fiducian Investment Management Services.
Fiducian investment manager Conrad Burge said that in addition to the terms of trade decline, unemployment rose by 0.2 per cent to 6 per cent.
The global economy, he said, has also slowed in recent months, with growth in most economies weak in the December quarter.
According to Mr Burge, the global economy is challenged by numerous factors.
"These challenges include a continuing rebalancing of the Chinese economy (from being manufacturing export-focused to domestic services-focused), lower commodity prices and the exit from accommodative monetary conditions in the US," he said.
Share markets have also recorded declines. As at 24 February, the Australian share market had declined by 8 per cent since 1 January.
Germany, Japan and China were harder hit, with declines of 15 per cent, 16 per cent and 17 per cent respectively. The US and UK share markets also fell by 6 per cent.
“Valuations though have improved and most share markets currently appear to be fairly priced, especially compared with other sectors such as bonds,” Mr Burge said.