The risk of recession in the US and Europe is high. Australia is not immune, but is well placed to withstand a renewed global slump. The initial line of defence includes interest rate cuts from the Reserve Bank of Australia (RBA), which we expect to commence possibly as early as October.
Australian assets are better placed than was the case prior to the Global Financial Crisis (GFC), with cheaper valuations for shares and commercial property. Housing is a bit vulnerable in the short term, but should benefit from lower interest rates from around mid 2012. The Australian dollar (A$) is vulnerable to global growth concerns in the short term, but is likely to continue trending higher as major global central banks continue to debase their currencies