An Economic Update Australian Unity Investments Claire Harding – Head of Portfolio Management

Crisis averted Real GDP Growth (year on year) Source: RBA

But it wasn’t easy Exports - Asia Source: RBA

Australia - full steam ahead Source: RBA Australian GDP growth (% p.a.) Contribution to GDP (% year to Sept. 2009)

…and there is lot of steam Australian Exports Source: RBA

Inflation under control … Consumer Price Inflation (%) Underlying Inflation (% year ended) Source: RBA

… for now WagesAustralian Dollar and TWI Source: RBA

Global recovery… Industrial Production (% p.a., quarter on quarter) Source: IMF Merchandise Exports (% p.a., quarter on quarter)

… buoyed by policy stimulus Policy Interest Rates Source: RBA

In Australia Australian Cash RatesRBA Official Reserve Assets Source: RBA

But, in the US … Source: BCA Research Not as stimulative as you might think

… and fiscal G-20 Stimulus Plans Source: Brookings Institute US$ bn

An aside on fiscal policy Stimulus Payout - USReal GDP Growth Contribution Source: Moody’s Economy.com

Challenges - where there is smoke… Unemployment Source: RBA

…there may be fire Total Job VacanciesEmployment Composition

A consumer confidence game… Consumers – household assets Source: RBA

…where the stakes are high… Consumers - spending Source: RBA

very high Sources: BEA, FRB, Moody’s Economy.com US Consumers underwritten by Treasury US$ trillionIndex

Challenge - Public Finances Government Financial Liabilities % of 2008 GDP, (net) Source: RBA Bonds on Issue in Australia

Financial recessions are different Source: BCA Research Global output Peak at t=0, quarters following Deleveraging has barely begun

Prognosis 2010

Outlook – what to expect Source: IMF Global GDP Growth (% p.a., quarter on quarter)

 Private funding problems have been transferred to the public sector- but they still exist  The global economy remains vulnerable to: – Deluge of public debt – Inflation issues – Rising cost of capital – Sovereign debt contagion- e.g. Greece & Ireland Outlook – what to expect

Outlook – how to invest  Market expectations: – Volatility – Equity market raisings – Credit ratings downgrades, a rapid rise in defaults – Dilution and defaults to weigh on equity markets  Grab certainty where you can – Income – Inflation – AUD  Don’t forget the downside

Asset management capabilities

Important information This information has been prepared as general information and for use by financial advisers only. It does not take into account your circumstances. While every care has been taken in the preparation of this information, we cannot warranty its accuracy or completence and we reserve the right to make corrections. Information can change over time.