Australia will face challenges in the future

The Australian dollar is weakening once again and is expected to continue depreciating due to the ongoing global economic contraction. This has impacted Australia, which relies on exports as a major driver of its economy, leading to repercussions that affect domestic business growth. Additionally, economic data releases from the United States have contributed to the increased pressure on the Australian dollar, causing it to depreciate more than before.

Llewellyn-Smith of MB Super and Nucleus Wealth highlighted the influence of China's economic slowdown on Australia's future, stating that "China has reached a critical point of economic growth, and the property bubble implosion has become a significant vulnerability, impacting Australia. This is considered a major adjustment period for Australia."

Australia's manufacturing sector Purchasing Managers' Index (PMI) decreased to 49.4 in August from 48.6 in the previous month, marking the sixth consecutive month of contraction due to a decline in business conditions leading to reduced new orders and decreased production. Despite this, employment in the manufacturing sector continued to increase, resulting in higher production prices due to rising costs. Business confidence among manufacturers in Australia has remained relatively high since February.

The services sector's Purchasing Managers' Index (PMI) decreased to 46.7 in August from 47.9 in the previous month, reaching its lowest level since January 2022. This contraction stems from the impact of rising interest rates and the contracting economy, leading to reduced service consumption. As a result of decreased competition, the rate of price inflation also declined. In the latest survey, various companies maintain a positive outlook for the current economic situation and intend to hire additional employees.

Economic projections suggest that Australia's economy will experience slower growth in the next 40 years. This projection is due to the increasing elderly population, which contrasts with a declining birth rate, leading to a reduction in the workforce. This will impact the GDP growth rate, which is expected to grow by only 2.2% annually over the next 40 years until around 2063, considerably slower than the previous 40 years' growth rate of over 3.1%.

Prime Minister Jim Chalmers stated, "Our economy continues to grow steadily, but our future prosperity depends on our ability to revitalize production growth and improve essential, high-quality services. Looking ahead, we should ensure that we maintain a sustainable fiscal position in the face of challenging circumstances."

Techical analysis data (5H)

Resistance:1.5573, 1.5593, 1.5629

Support: 1.5517, 1.5481, 1.5461

Source: Investing.com