There was plenty on offer for Kiwi investors at the recent Queensland Retirement Summit, hosted by the Australian Shareholders’ Association with support from the NZ Shareholders’ Association. This included a presentation from Bendigo Bank Chief Economist, David Robertson, that provided a solid overview of the Australian economy, useful for any New Zealand investor.
The key message: Australia’s economy will remain more resilient than most developed peers, but warned that productivity reform remains the country’s critical vulnerability.
In a wide-ranging presentation, Robertson forecast two further rate cuts from the Reserve Bank of Australia (RBA) by early 2026, an economy buoyed by discretionary spending and household income growth, and a technology-driven cycle of expansion in the years ahead.
All of the that underpins some strong long-term fundamentals. But in the same breath, he also forecast some short-term volatility facing equity investors, with US and Australian markets “priced for perfection”.
Tariffs, Trade Wars and Market Volatility
Robertson’s sharpest criticism was reserved for US President Donald Trump’s tariff regime, which he argued will extract “half a trillion dollars” in revenue for the United States, but at the cost of weaker growth and higher inflation.
“Economists and central bankers are united—tariffs don’t work. They will slow the US economy, shave half a percent off global growth, and add about one percent to US inflation over the next year”.
Markets have already worn the volatility: US indices dropped 20% when tariffs were announced in April, before recovering to record highs in recent weeks. Robertson expects more turbulence ahead.
Australian Economy: A Shallow Easing Cycle
Australia, he argued, is weathering the global storm better than most. Inflation has retreated to 2.5%, wages are rising at 3.5%, and unemployment is still below pre-pandemic levels.
“We’ve had three cuts already. I expect the next one on Melbourne Cup Day, then another in February. That would take the cash rate to about 3.1%, which I’d regard as neutral,” he said.
The consequence is a “shallow easing cycle” rather than the aggressive stimulus seen elsewhere. Robertson stressed that Australia’s ability to dodge recession—unlike New Zealand, Canada or the UK—was proof the RBA had judged the tightening cycle more effectively to engineer the sought after soft landing for the Australian economy.
Housing, Productivity and Three-Speed Growth
Robertson described the nation as a “three-speed economy”: Queensland and WA in the fast lane, New South Wales in the middle, and Victoria lagging. Housing markets show the same pattern, with Perth and Brisbane powering ahead while Melbourne remains the only capital to post price declines.
Nationally, property values are up 33% in five years, with some regional areas doubling. Robertson expects future gains to be restrained, at around 3–4% a year (just above inflation) as supply slowly catches up with demand.
But he was blunt on productivity: “It’s the weak link. We need bold structural reform, and we’re not seeing it. Without it, living standards will stagnate.” It’s a sentiment echoed here in New Zealand also, most recently in an excellent article by economist Cameron Bagrie in a New Zealand Herald article.
Technology: The Wild Card
Back to Australia. Robertson sees technology as the unavoidable driver of the next cycle. Artificial intelligence, blockchain and quantum computing will “supercharge” productivity but also disrupt labour markets. The key risk for investors is disruption; while AI will create more jobs than it destroys, how adaptable will the workforce be? In a sentiment similar to that expressed by Bagrie in a New Zealand context, he echoed the critical role to be played by effective governance.
Roberstson projected that by 2027, interest rates could be rising again – not because of inflation, but because growth is so strong that a higher neutral rate will be required.
Implications for New Zealand Investors
For New Zealand investors, Robertson’s outlook carries several clear signals:
- Australian equities: Despite short-term volatility, Robertson is confident equities will be significantly higher in three to five years. It follows that NZ investors with ASX exposure can treat short-term dips as entry points.
- Currencies: A weaker US dollar could push the Australian dollar back toward 70 cents. For Kiwi exporters, this may reduce the trans-Tasman competitive edge; for NZ investors holding AUD-denominated assets, currency risk becomes more favourable.
- Housing divergence: Australia’s property cycle remains stronger than New Zealand’s, driven by the property cycle in Queensland and WA. For investors exposed to both markets, this suggests relative upside in Australian real estate investment trusts (REITs).
- Productivity gap: Robertson’s warning on productivity echoes long-standing NZ debates. If technology fills the gap, investors will be looking for companies that are well-positioned to take advantage of productivity upsides, on both sides of the Tasman.
Robertson’s message to investors was clear: brace for volatility, ignore the noise of tariffs, and position for a technology-driven cycle that will leave Australia relatively well placed.
Markets might be “priced for perfection”, but he offered some comfort that despite the pressures of short-term volatility, they could be significantly higher in 3-5 years.
Oliver Mander