Political Uncertainty May Result in Economic Uncertainty

Killian Plastow, InvestorDaily

The weekend’s federal election results pose difficulties for the finance industry, with AMP warning of “greater policy uncertainty” under the next government. In a note to investors, AMP Capital’s head of investment strategy and chief economist Shane Oliver said a downgrade in Australia’s sovereign credit rating was “now a serious risk”. Mr Oliver added that the “ultra close” result presented difficulties for economic reform policy, which could slow growth even further.

“The widening left/right divide in Australian politics suggests greater policy uncertainty and dwindling prospects for productivity enhancing economic reform,” he said. Financial services provider IOOF also noted the election result’s problematic nature, saying the outcome “typifies” the Australian finance industry’s “desire for clarity and certainty”. “The reality is that this may be unattainable regardless of which party eventually forms government,” IOOF said in a statement.

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