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Axiome June update 2017


the June quarter of 2017 the economic recovery that we have been highlighting over the past couple of years gathered strength.  For the first time in around three years there were no major negative surprises in the world’s large economies – better than expected economic conditions were experienced in China, Europe and Japan.  India’s remarkable run also continued.

New Zealand bucked the trend, but is still expected to remain a relatively well performing economy.  Global growth is forecast to be around 3.5% for this calendar year, around its long-term trend level and the best performance since 2014.  Short term indicators such as world trade, industrial production and manufacturing activity also continue to turn up.

Partly for this reason, the June quarter also marked another generally solid quarter for global risk assets.  The broad MSCI index of emerging market companies was the stand-out, returning 6.3% for the June quarter and around 24% on an annual basis.

NZ equities also had a strong run returning around 6%, but on an annual basis performance is relatively weak at ‘only’ around 10.5%.  In contrast, Australian equities are up over 14% on an annual basis, and other developed markets are up around 21% on a NZD hedged basis, and 15% on an unhedged basis.

The cyclical upturn has also, finally, returned average OECD inflation levels close to targets of around 2% per annum.

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