Presented by Chris Caton20 March 2007

A Global Economic and Market Outlook

Oil Prices (West Texas) in $US/bbl

Source: Datastream

0

10

20

30

40

50

60

70

80

83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

Oil Prices (West Texas) in $A/bbl

Source: Datastream

0

20

40

60

80

100

120

83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

Petrol Prices relative to CPI

Source: ABS

0.7

0.8

0.9

1

1.1

1.2

1.3

1.4

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

US Housing starts and Permits

Source: Datastream

1

1.2

1.4

1.6

1.8

2

2.2

2.4

96 97 98 99 00 01 02 03 04 05 06 07

Permits Starts

(Millions)

US Construction Spending

Source: Datastream

-15

-10

-5

0

5

10

15

20

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

Year-to growth

Total US Non-farm Employment

Source: Datastream

-0.8

-0.4

0

0.4

0.8

1.2

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

3mth / 3mth chg

US CAD % of GDP

Source: Datastream

-1

0

1

2

3

4

5

6

7

8

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

%

2007 Growth Forecasts (%) Month of Forecast

A-06 S-06 O-06 N-06 D-06 J-07 F-07

Australia 3.3 3.4 3.3 3.2 3.0 2.9 2.9

New Zealand 2.1 2.0 1.9 1.9 2.0 2.1 2.3

US 2.7 2.6 2.6 2.5 2.3 2.4 2.7

Japan 2.2 2.2 2.2 2.0 2.0 1.8 1.9

China 9.0 9.1 9.1 9.3 9.5 9.6 9.7

Germany 1.1 1.2 1.2 1.3 1.5 1.5 1.7

UK 2.4 2.4 2.4 2.4 2.4 2.5 2.6

“World” 3.1 3.2 3.2 3.2 3.2 3.2 3.3

Source: Consensus Economics

Real GDP growth in Australia and the US

Source: Datastream

-4

-2

0

2

4

6

8

10

80 82 84 86 88 90 92 94 96 98 00 02 04 06

US Australia

Year to % change

The Labour market

Source: ABS

7500

8000

8500

9000

9500

10000

10500

89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

4.4

5.5

6.6

7.7

8.8

9.9

11000’s %

Employment (LHS)

Unemployment Rate (RHS)

Australian Inflation

Source: ABS

-1

0

1

2

3

4

5

6

7

8

9

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

Headline CPI Underlying inflation

%

BT Forecasts

GST Effect

Terms of Trade

Source: ABS

70

75

80

85

90

95

100

105

110

115

120

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

Index

A long-term look at prices

REAL BASE METAL PRI CES*

40

60

80

100

120

140

160

180

200Ja

n-5

7

Jan

-61

Jan

-65

Jan

-69

Jan

-73

Jan

-77

Jan

-81

Jan

-85

Jan

-89

Jan

-93

Jan

-97

Jan

-01

Jan

-05

Jan

-09

IND

EX

* BASE METAL PRICES RELATIVE TO OUTPUT PPI (US$)

Housing Approvals

Source: ABS

4000

6000

8000

10000

12000

14000

16000

18000

20000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

units

Building Approvals

Housing finance approvals for new and newly-constructed homes

Investor Borrowing for residential property

Source: ABS

0

1

2

3

4

5

6

7

8

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

$bn

Ratio of Australian house prices to GDP

Source: UBS

0.8

0.9

1

1.1

1.2

1.3

66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06

Gross Domestic Product

Source: ABS

-3

-2

-1

0

1

2

3

4

5

6

7

8

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

Qtly growth Year-to growth Non-farm year-to growth

%

BT Forecasts

GST Effect

Now(16 Mar)

End-Jun2007

End-Dec2007

AUD/USD 0.789 0.75 0.75

Official cash rate (%) 6.25 6.25 6.25

10 Year Bond yield (%)

5.62 5.80 5.80

ASX 200 5830 6000 6200

Financial Market Forecasts

The Australian Dollar and US Trade Weighted Index

Source: Datastream

62

78

93

109

124

140

00 01 02 03 04 05 06 07

0.4

0.5

0.6

0.7

0.8

0.9Index AUD/USD

US TWI inverted (LHS)

AUD/USD (RHS)

US and Australian P/E Ratios

Source: Datastream

5

10

15

20

25

30

35

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

S&P 500 Australian Total Market Index

Australian Sharemarket Performance – ASX200

Source: Bloomberg

1500

2000

2500

3000

3500

4000

4500

5000

5500

6000

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

Source: Consensus Economics

GDP Consumer PricesAustralia 3.2 2.7United States 3.0 2.4New Zealand 2.8 2.5Canada 2.7 2.0Spain 2.5 2.7Sweden 2.5 1.9Norway 2.5 2.1United Kingdom 2.3 2.0Netherlands 2.2 1.9France 2.1 1.8Japan 1.9 1.3Eurozone 1.9 2.0Switzerland 1.8 1.4Germany 1.6 1.7Italy 1.5 2.0

Global Medium-Term Economic Growth and Inflation Prospects (2006-2016)

Asia-Pacific Medium-Term Economic Growth and Inflation Prospects (2006-2016)

GDP Consumer PricesChina 8.6 3.2India 7.3 4.5Indonesia 5.8 6.2Singapore 5.5 1.4Malaysia 5.3 3.0Thailand 4.7 3.5South Korea 4.6 2.5Hong Kong 4.6 2.8Taiwan 4.1 2.0Australia 3.2 2.7New Zealand 2.8 2.5Japan 1.9 1.3

Source: Consensus Economics

Morgan Stanley Capital Indexes

Source: Datastream

600

780

960

1140

1320

1500

1680

1860

2040

2220

2400

99 00 01 02 03 04 05 06 07

100

130

160

190

220

250

280

310

340

370

400Developed Index Asian Emerging Markets Index

Asian Emerging Markets Index (RHS)

World Developed Index (LHS)

Summary World economic growth remains good . The risk is that the

US slows more than expected.

6-10% gains in international shares likely in next 12 months.

Australian economy is still doing well.

The November rate rise may have been the last.

House prices are going nowhere fast.

The exchange rate is still a two-way risk.

Australian market likely to perform on a par with overseas.

Disclaimers

The information in this presentation is general only and does not take into account your particular investment objectives or financial situation. Before making an investment decision you should consult a financial adviser. The information is given in good faith and has been derived from sources believed to be accurate. However, no member of the BT Financial Group gives any warranty of reliability or accuracy nor accepts any responsibility arising in any other way including for negligence. This disclaimer is subject to any contrary provisions of any applicable legislation. An investment in any fund described in this presentation is not a deposit with or any other liability of Westpac Banking Corporation ABN 33 007 457 141. None of Westpac Banking Corporation or its related entities guarantee the capital value or investment performance of any fund. Unless stated otherwise, BT Financial Group is the source of all charts, performance information and other data. Past performance is not a reliable indicator of future performance.

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