Dave’s Corner

The economic hangover of COVID-19: how long will it last?

As the Australian economy begins to emerge from hibernation, the question of what the recovery will look like – and how long it will take – is being hotly debated.
AMP Capital chief economist Dr Shane Oliver says that although economic activity is unlikely to return to pre-COVID-19 (coronavirus) levels until late in 2021, just a few months ago we were questioning whether the shutdowns would stop the spread of the virus and, if not, whether there would be a recovery at all.

Below he shares his predictions for some of Australia’s key economic measures and the risks to watch out for on the road back.

Economic growth
As measured by gross domestic product (GDP), economic growth in Australia has contracted and I expect and predict a very large hit to GDP – down about 10% – in the three months to June, with April’s retail sales figures recording the worst fall ever due to the COVID-19 restrictions and closures during this time.
The good news is that the shutdowns have been much shorter than the six months initially forecast by the Prime Minister, and now that they’re beginning to ease restrictions, GDP should recover from June onwards.

But the recovery won’t be fast – rather than a sharp rebound (or ‘V’ shaped recovery) I expect and project more of a ‘U’ shaped recovery – because while some parts of the economy will recover quickly, others will take longer. This is the sort of recovery that was experienced around the world following the global financial crisis.

And globally, the fall in GDP is likely to be the biggest since the Great Depression of the 1930s. The blue line below, which tracks business confidence, shows how big the fall in global GDP could be, although it also shows that business confidence is beginning to pick up.

Inflation and interest rates
Inflation – which is currently around 1.9% in Australia – is expected to will remain low, which should make it easy for the Reserve Bank of Australia to keep interest rates low. I think interest rates will remain at their current levels of around 0.25% for at least the next three years, which is good news for people with mortgages, and also for the economy, as people with home loans are one of the groups that spend the most.

If the Australian Government hadn’t introduced the JobKeeper assistance scheme, the unemployment rate in Australia today would probably be close to 15%. But thanks to this assistance it’s only 6% currently and I think it’s possible it may not even reach 8%, providing the economic recovery continues.
The share market
At the peak of the crisis, the Australian share market fell by almost 37%, but since then it’s recovered up by around 29%. And although dividend yields have been cut, they’re still more attractive than bank deposits due to low interest rates. It’s difficult to predict where the share market will go in the short term – more falls could occur as the market responds to bad news such as a drop in company profits. But over 12 to 24 months, share markets should rise.

House prices
There’s been a significant fall in the number of houses for sale and thanks to that we haven’t seen much of a fall in prices yet, but house prices are likely to fall if people are forced to sell as unemployment rises and as immigration falls. Sydney and Melbourne could also suffer from a lack of immigration-driven demand. I think prices on average could drop by about 10% which would take them to their mid-2019 levels. However, low interest rates continue to benefit the housing market.

The budget deficit
To support our economy, I think the Australian Government had to provide stimulus, and has done so in a way that’s affordable. Despite the assistance packages released by our government, the level of public debt in Australia is quite small compared to other economies, as shown in the chart below.

Risks to look out for
Despite a fairly positive outlook, there are some risks on the horizon including:

• A second wave of infections
A second wave of infections could lead to a second wave of shutdowns, which would slow the economic recovery.
• The end of government stimulus
In late September when the JobKeeper assistance payments end and the JobSeeker payment for those looking for work is halved back to its pre-COVID-19 level, unemployment, bankruptcies and business closures could all rise, which would have impacts on consumer spending, house prices, economic growth and the share market.
• US/China tensions
COVID-19 has re-ignited tensions between the US and China and I expect this will continue in the run up to the US election in November. History tells us that US presidents don’t get re-elected when unemployment is rising or when the economy is in recession, so President Trump is trying to shift blame to China for political gain, which could drive volatility in investment markets. Australia’s current trade tensions with China are also a risk, but as long as they don’t escalate, we are still well placed to benefit from the Chinese economic recovery.
To sum it all up, while it will take a little while – and a little luck – I think the Australian economy is in a stronger position for a faster recovery than many other countries, mainly thanks to our good health outcomes and the strength of our government assistance.

The Australian dollar
I think we saw the low point for the Australian dollar against the US dollar at around 55c in March and it will probably move slowly higher as our economy recovers as it is expected to recover faster than the US economy.

6 Easy and Safe Exercises to do in isolation from www.nursenextdoor.com

Are you looking for some safe and easy exercised to do whilst you are at home, then www.nursenextdoor.com have released six easy and safe exercises for you to do.

Have you been thinking that you need to exercise more but you don’t know where to start?

Participating in regular physical activity will help you:

– maintain your muscle mass

– increase your bone density

– improve your balance, posture and flexibility

– have better control of chronic disease symptoms

– decrease pain and depression

– prevent falls

Safe Exercises for Seniors

The Center for Disease Control and Prevention (CDC) states 28% of the population over the age of 50 are physically inactive. This is a sad fact considering that 4 out of 5 of the most limiting chronic health conditions could be managed or prevented with physical activity.

As you age your heart muscles and arteries can become stiffer. The ligaments surrounding your joints becomes less elastic leading to increased pain and stiffness. Your body also metabolizes food slower which can lead to weight gain.

Throughout the world, the World Health Organization, has linked 3.2 million deaths to not enough physical activity. The Centers for Disease Control and Prevention (CDC) reports that falls are the number one cause of fatal and non-fatal injuries in the United States for people who are over the age of 65 years.

Not only does exercise help you feel better, but you may also look better and can enjoy a higher quality of life. Exercise helps you continue to do many of the things you love and need to do.

Many seniors are afraid to exercise at home because they are worried they may injure themselves; that is a valid concern.

Exercise is meant to improve your health, not cause you to get hurt. As always, check with your physician before starting any new exercise programs.

Helpful Tip: If you are worried about your safety while trying new exercises, seek a healthcare/fitness professional ahead of time. You both can have fun learning new exercises and you will know somebody is there to help you if you need it.

Nurse Next Door has curated a list of exercises that may be beneficial for seniors. These six user-friendly exercises for seniors to do at home and will focus on the core areas of (click to scroll):

  • Strength
  • Balance
  • Flexibility

Exercises for Strength

Strength training is not just for bodybuilders! Stronger muscles help you to continue to do all the things you need to do in a day from walking up stairs to getting out of a chair.

Dean Maddalone, a certified strength and conditioning specialist states that you can lose 3-8% of your muscle mass each decade. Strength training increases bone density by 1-3% and reduces your risk of death from heart disease by 41%.

Chair Squats

Pretending that you are about to sit down in a chair can strengthen your entire lower body.

  1. Stand in front of a chair with your feet as far apart as your hips.
  2. Bend your knees while keeping your shoulders and chest upright.
  3. Lower your bottom so you sit down.
  4. Then push your body back up to return to a standing position.

Looking for more easily accessible exercises you can do by just having a chair at home? Check out 21 more chair exercises here!

Wall Push-Ups

These push-ups can provide strengthening for your entire upper body with a focus on your arms and chest. But you don’t have to get down on the floor and worry about being stuck there!

  1. Stand in front of a sturdy wall, up to two feet away but as close as you need to.
  2. Place your hands up against the wall directly in front of your shoulders.
  3. Keep your body straight and bend your elbows to lean in towards the wall.
  4. Stop with your face close to the wall and then straighten your arms to push your body away from the wall.

Exercises for Balance

Falls are one of the leading causes of visits to the emergency room. About 30% of people over the age of 65 will fall each year. Often a fall can result in fractures and declining health. Balance helps you to keep yourself on your feet and recover from those accidental upsets.

Single Foot Stand

This exercise is similar to standing like a flamingo but less dangerous.

  1. Stand behind a steady, unmoveable chair and hold onto the back.
  2. Pick up your left foot and balance on your right foot as long as is comfortable.
  3. Place your left foot down and then lift up your right foot and balance on your left foot

You are aiming to be able to stand on one foot without holding the chair for up to a minute.

Tippy Toe Lifts

You can pretend to be a ballerina while strengthening your legs and improving your balance with this exercise.

  1. Stand beside or behind a chair or counter and place your hands on the surface for support.
  2. Push yourself up onto your tippy toes as high as is comfortable and then return back to a flat foot. Repeat.
exercises for seniors

Exercises for Flexibility

Tight and sore muscles make it difficult to do things that were once simple such as pulling up your socks or reaching for something high up. Improving your flexibility helps you maintain good posture and move more freely and easily.

A study published in the International Journal of Physical Therapy found that after 10 weeks of stretching 2-3 times a week, older adults had better spinal mobility, an increased ability to flex their hips and a more steady gait.

Don’t forget that stretching for flexibility should be slow and controlled. Warm up your muscles first by walking and moving. Hold a stretch for up to 30 seconds while you breathe deeply in and out.

Wall Snow Angels

Do you remember plopping down on your back in a patch of freshly fallen snow, sliding your arms and legs up and down to form a perfect “snow angel”?

This exercise helps to open up your chest and to decrease that tightness in the middle of your back that develops as a result of looking down. But you don’t have to fall on your back in the snow to do this “wall angel”!

  1. Stand about 3 inches away from the wall and place your head and lower back flat against the wall.
  2. Put your hands at your sides with the palms out and the backs of against the wall.
  3. Keeping your arms touching the wall, raise them up above your head (or as high as is comfortable).

Repeat a couple times to make some beautiful imaginary wings for your angel.

The Head Turn

One of the simplest and easiest stretches to do! This exercise involves a movement you do whenever you shake your head “no”.

  1. Stand or sit with your back straight and your shoulders relaxed.
  2. Turn your head slowly to the right until you feel a light stretch.
  3. Hold that position and then turn slowly to the left.

This exercise helps to keep your neck mobile, that’s important for driving and being aware of your surroundings!

Easy and Safe Exercises for Seniors

Ever wondered the true cost of your loan?

A comparison rate indicates the true cost of a loan

If you have ever looked for a loan you would most likely come across a little known and sometimes hard to find, term called the comparison rate. The comparison rate is there to allow you to compare the true cost of your loan. For example, a loan may have an advertised rate of 2.85%, but when you add up the associated fees and charges, the real rate of the loan may be over 4.0%

A comparison rate is designed to help you understand the overall cost of a loan based on several relevant factors, rather than just the interest rate. Each comparison rate accounts for the:

  • amount of the loan
  • loan term
  • repayment frequency
  • interest rate
  • fees and charges

Why pay attention to comparison rates?

The loan with the lowest interest rate isn’t always the cheapest option. When researching products offered by different providers, you can use the respective comparison rates as a more accurate indication of loan cost than you would otherwise get by only comparing interest rates. This can help you decide which option might suit your needs.

For instance, a loan with a low interest rate but high fees and charges may have a higher comparison rate than a loan with a higher interest rate but low fees and charges. Note that comparison rates only apply to loans with a fixed term, not lines of credit such as flexi loans, as there are too many variables.

Things to keep in mind

Remember that when you look at comparison rates, the loan amounts and terms don’t cover all possible situations – so they may not be an accurate reflection of your particular loan. The amounts that a comparison rate is based on will be in the fine print.

While comparison rates can be a good starting point, they’re not the only thing to consider when shopping around for a personal loan. It’s also important to compare the other features of the loan to see if it works for you.

If you are looking to purchase a property or refinance an existing loan, give our mortgage broking team a call. We have access to over 25 different lenders and aim to match you with the most appropriate loan to suit your needs.