shane oliver

The financial services giant’s top economists look at the risks that dominated markets this year and how they’re likely to evolve in 2024, warning that the new year could be a “rougher and more constrained ride” compared with 2023.

Investors today have no shortage of worries to keep them up at night. According to AMP’s chief economist, it’s an ideal time to revisit some crucial investment principles that can help protect capital and provide peace of mind.

Whether an investment is expensive or cheap is a key and often overlooked driver of future returns, explains AMP’s Shane Oliver. At the moment, starting points signal a brighter medium-term outlook for some asset classes than for others.

The chief economist says rapidly falling inflation, high savings levels and a lack of excess are among the reasons this pivotal moment could pass without the major downturn that many have long dreaded. But AMP still puts recession odds at 50/50, and rate cuts will likely need to precede any growth rebound.

Economists attributed the rebound partly to the market’s expectations that interest rates had peaked. But the other key driver – the drastic supply/demand imbalance – means higher prices, especially for rents, may be further complicating the central bank’s task.

The uncertainty now blanketing the global banking sector adds to the risk of recession, but it comes with a silver lining, AMP’s Shane Oliver told The Inside Network’s Growth Symposium: it’s a sign that central banks’ battle against surging inflation may be nearing its end.

New data shows Australian house prices have dropped 8.4 per cent since their peak in May 2022, the largest decrease on record. While further RBA rate hikes could deepen the downturn, experts say a crash in 2023 is not inevitable.

More rises are likely but analysts say a confluence of factors may cap the official rate at around 3.1 per cent in 2023, providing relief to Australian households.

As interest rates creep north, advisers extoll the virtue of investing away from the family home and into a diversified suite of assets.

Australians are the richest they have ever been, with wealth pushed up by rising property and shares values to a record $14.9 trillion in the March quarter of 2022, while wealth per capita surged to a record high of $574,807, according to data from the Australian Bureau of Statistics.