The Australian economy has been in the dole-drums for some time now with the economy faltering and government debt skyrocketing, it has seen some rapid changes over the last two months as a new government has come to power.
So far the new Tony Abbot government seems to have a rather serious undertone to all its policies and actions and that is “Australia is open for business.” This has come as a surprise to the nation, but not by many political observers, who have long seen the liberals in Australia as being primarily pro-business.
In nearly all of the recent talks and speeches given by the Abbot government, they have pushed their agenda on the masses and the economy is slowly starting to respond. The social and environmental damage has so far taken a back seat to anything other than economic growth, which the government sees as the main mechanism to help the country.
The results have already been seen, as CAPEX spending has been forecasted to lift with these recent changesleading to a jump in the Australian dollar and the equity markets, with many projects that were deemed to expensive or impossible under a labour government now coming online and starting to go through the motions of investment and spending.
The Australian dollars trade weighted index (TWI) has also looked a little more upbeat, and many are now wondering if it can even go higher in the short term.
This looks likely given the governments mandate to reduce debt in the country has had some positive results in the markets -- despite the fact that Australia is one of the least indebted countries on the planet. As recent tax raises are set to help control the current situation and reduce debt further, to push the government back into surplus.
The question is, will it get any worse – the answer is probably not. In fact, the government's recent actions have so far spurred investors into having a positive mindset for the future of the Australian economy despite the strong public opposition to the changes mandated.
Current optimism remains strong for further gains in the Australian economy. You don’t have to hit a surplus for markets to actually be positive about the economy, as markets are inherently forward looking and if you’re making progress then they will take notice, and react accordingly. So in the short term we will likely see some consolidation, followed by long term sentiment helping to push the Australian dollar against major trading partners.