15 August 2024
This month, we caught up with the Investment Team at AustralianSuper to get their view on the approaches of central banks and the role of AI in the economy.
A year ago, the levels of inflation and central bank activity to tighten monetary policy led many economists to see the potential for slower economic growth. The analysis provided views of “soft landing” or “hard landing” scenarios to describe how much the economy might dip. The “no landing” scenario was considered as the year progressed based on the resilience of consumer spending that continued to support economic growth and corporate profitability. As we look forward, there is a higher potential for major global economies to grow at trend levels and a reduced likelihood of a significant economic slowdown in the near term.
Central banks are focusing on economic data and the assessment of risks in determining the level of cash rates. Risks that are being considered include levels of household consumption, output growth, employment levels, labour costs and geopolitical uncertainties that could impact supply chains.
Inflation is also being closely monitored. While inflation is moderating in many economies such as the United States, it has proven to be sticky in Australia and the UK due to persistently high services inflation. Given the focus of central banks on maximising employment and pursuing stable prices, they continue to monitor inflation, consumer demand and labour market conditions to determine what actions are necessary to balance these factors.
The technology boom, particularly in the field of Artificial Intelligence (AI), is a mega trend that is impacting economies and investment strategies globally. This era is reminiscent of past periods when significant technological advancements have led to substantial growth and investment opportunities.
The AI revolution is akin to the industrial revolution or the advent of the internet and mobile phones, which heralded long-term productivity gains and economic growth. AI has the potential to help businesses run more cost effectively. We expect that AI will continue to be a key driver of market growth, and our strategic shift in investment approach is designed to harness these gains.
Our commitment to members is to deliver strong long-term investment performance. Recognising the potential of AI, we’re positioning ourselves to invest in opportunities that have the potential to grow members’ savings.
Sponsored by AustralianSuper. Any general advice provided in this article is provided under the AFSL held by AustralianSuper, it doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/PDS or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.
AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.
