The document provides an economic and market outlook presented by Dr. Chris Caton in August 2011. It summarizes forecasts for the global economic recovery, Eurozone debt issues, the Australian economy and market performance, inflation rates, and growth prospects for Asia-Pacific regions through 2021. The presentation concludes that the global recovery will continue slowly, Eurozone debt poses risks but likely not major disruptions, and the Australian economy should see strong growth led by mining investment, with share markets remaining cheap.

1. A Global Economic and Market Outlook Presented by Dr Chris Caton August 2011

2. My first cartoon ever 2

3. The Eurozone debt issue– peripheral long bond spreads 3

4. 4 Financial Market Forecasts

5. 5 The Australian Dollar and US Trade Weighted Index Index AUD/USD AUD/USD (RHS) US TWI inverted (LHS) Source: Datastream

6. The exchange rate and interest rate differential 6

7. 7 Australian Sharemarket Performance – ASX200 Source: Bloomberg

8. The Australian market is again cheap (forward P/E ratio) 8

9. The Australian market has underperformed 9

10. 10 It makes a difference when you buy

11. 11 US Housing starts are bumping along the bottom (Millions) Source: Datastream

12. 12 2011 Growth Forecasts (%) Month of Forecast Source: Consensus Economics

13. 13 2012 Growth Forecasts (%) Month of Forecast Source: Consensus Economics

14. Industrial production (April 2005=100) 14

15. 15 Real GDP growth in Australia and the US Year to % change Source: Datastream

16. 16 What goes up…..

17. 17 The Labour market has done well but employment growth has slowed 000’s % Employment (LHS) Unemployment Rate (RHS) Source: ABS

18. Retail has slowed 18

19. And here’s one reason..household saving has risen 19

20. 20 Australian Inflation % BT Forecasts GST Effect Source: ABS

21. Interest rate changes do make a difference! 21

22. House Prices - Australia v Perth Index (1987 = 100) Source: ABS

23. House prices since 2005 23

24. Prices have fallen everywhere 24

25. 25 Gross Domestic Product % BTForecasts GST Effect Source: ABS

26. Coal exports are recovering but still have a way to go 26

27. 27 Mining investment (share of GDP)

28. 28 Global Medium-Term Economic Growth and Inflation Prospects (2011-2021) Source: Consensus Economics

29. 29 Asia-Pacific Medium-Term Economic Growth and Inflation Prospects (2011-2021) Source: Consensus Economics

30. 30 Morgan Stanley Capital Indexes Developed Index Asian Emerging Markets Index Asian Emerging Markets Index (RHS) World Developed Index (LHS) Source: Datastream

32. The Australian economy should resume strong growth, led by mining investment.

33. Rates may eventually rise further.

34. The exchange rate is above fair value. The rest of the world is on sale for Australians.

36. 33 Australia’s public debt problem is complete fiction!