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There is little doubt that 2018 was a year of ups and downs in many sectors as worldwide volatility attempted to undermine what could otherwise have been a year of gains in certain areas. 

With China and the US looking unstable in completely different ways, house prices falling in Australia and consumer confidence at a relative low, it is hard to know exactly what to take from 2018 as a whole and determine how its events are likely to inform developments in the year ahead.

Plenty of talk has suggested that the world is on the same path that led to the global financial crash (GFC) in 2008, but many economists remain convinced that countries such as Australia are far less exposed to the kinds of problems that savaged markets and shares at the end of the previous decade.

The developments from the Royal Commission inquiry into financial misconduct has shocked the banking sector and led to a range of measures, from cost-cutting to hiking rates, in order to maintain profits. Meanwhile, lending in Australia is now slowing.

Intriguingly, figures suggest that the average Australian has never been in a better position than now. The median wealth is just under A$270,000 when considering available assets but not debts. This means that the nation has overtaken Switzerland to have the highest global median wealth, underlining the potential for more disposable income.

As of yet, however, this has not materialized into consumer confidence, with household spending appearing to drop throughout the year. When coupled with a lack of faith in the banking industry, it is clear that more needs to take place to shore up Australia’s support for lenders.

All the confusion about market direction and the political upheaval seen in Australia once again has meant that there is little stable ground to operate on and grow from easily. There are likely to be more difficulties in the road ahead. With new elections on the horizon for May 2019, Australia could see yet more disruption affecting long-term growth patterns.

With many analysts putting their names forward to say that they believe that a recession could well be on the way, any signs of a domestic credit slowdown will receive a fair amount of alarm. Prime Minister Scott Morrison has been quick to say that he can address the need to drop house prices in some quarters. Many Australians are struggling to get on the housing ladder or move up it.

There is a potential tug of war to come regarding which side Morrison will favor ahead of his need for key electoral promises. The voters whom he targets most will indicate the direction that the housing market may be heading in.

With all this in mind, the Australian dollar has appeared to be surprisingly strong. It could have plummeted with a strong US dollar leading the charge, but this has yet to materialize. In fact, Australia’s central bank has confirmed that it is happy with its dollar weakening against its US counterpart, as this can stimulate growth and increase wages. With a number of factors all fighting for contention in 2019, it appears that there is little consensus regarding exactly what will happen next in Australia.