Mr Oliver said growth is likely to remain uneven between countries which, while unnerving, means Australia is far from the global overheating associated with excessive growth in credit or inflation.
“In many ways the current environment is a bit like the mid- to late 1990s where US growth was good but subdued conditions elsewhere kept inflation and interest rates relatively low,” Mr Oliver said.
Falling commodity prices in response to a positive supply response are adding to this, he said.
“As a result monetary conditions are set to remain relatively easy as major central banks seek to head off deflationary pressures,” he said.
“In short, the next global recession looks to be a long way off – maybe not until later this decade in accordance with the cyclical pattern that has prevailed since the 1970s of major recessions every eight to 10 years,” Mr Oliver said.
Mr Oliver also said global shares are likely to continue to push higher as global growth continues and monetary conditions remain easy.
“Shares are no longer dirt cheap and so are dependent on earnings growth. This and the ongoing debate about when the Fed will start to raise rates is likely to lead to a more constrained and volatile ride,” Mr Oliver said.
“For shares at present we favour: Europe (which is still cheap, unloved and likely to see more monetary easing), Japan (which will see continued monetary easing) and China (which also remains cheap) over the US (which may be constrained by a Fed rate hike) and emerging markets generally (which are cheap but messy),” he said.
“Australian shares are likely to pick up pace as interest rates remain low and growth continues to rebalance away from resources, but will probably lag global shares again as the [Australian dollar] remains under pressure and commodity prices remain in a long-term downtrend,” Mr Oliver said.
