While Australia is unlikely to suffer directly from the Brexit vote, Australia’s economy faces a test of resilience against a wave of global market fear and the effects of the Brexit already being felt around the globe.
Since the Brexit, global financial markets experienced their worst day since the global financial crisis. The British Pound dropped more than ten per cent to the lowest level since 1985, several trillion dollars of value were lost to global stock markets and currency markets went into meltdown.
Australian share prices have already fallen sharply, government bond yields have dropped to historic lows and commodity prices have also dropped sharply. Despite a plunge in the Australian dollar, financial markets are expecting a 100 per cent chance of interest rate cut by the Reserve Bank of Australia by September.
The volatility in international markets is unlikely to subside soon with businesses and investors expected to slash spending and move from high-yield to low-yield investments.