For much of last decade, Australia’s outlook wasn’t an issue for investors. It was just steadily motoring along. But unfortunately, over the last year or so, the outlook for Australia has become more uncertain, reflecting a whole range of issues: the resources tax; minority government; consumer caution; excessive house prices; poor productivity growth; rising inflation, etc.

This uncertainty has been reflected in the relative underperformance of Australian shares compared to global shares over the last 18 months. It can also be seen in a divergence of views over the outlook for official interest rates.

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