Further policy action including cuts to interest rates will be required to kick-start the Australian economy in 2017, says Fiducian Investment Management Services.
Commenting on the “slow growth period” affecting many developed economies, Fiducian Investment Management Services manager Conrad Burge said more policy support was needed to support the economy.
“Overall, much remains to be done to lift global growth and, given the current soft economic environment, it is likely that most major central banks will maintain highly expansionary monetary policies for some time to come, with interest rates kept close to historic lows,” he said.
Mr Burge said the global economy is sitting on the edge of a “low-growth trap”, in to which some economies – such as Japan and the European Union – may possibly have already fallen.
Citing comments from International Monetary Fund managing director Christine Lagarde that “without forceful policy actions, the world could suffer from disappointing growth for a long time”, Mr Burge said growth was dependent on political involvement.
“It is hard to see how strong growth can be restored in some economies without a significant political change of direction,” he said.