Down Under to Down Wonder – an Open Australia weathers the Global storm
Over the past few years the global economy has been a fascinating place….
Not so long ago things were looking pretty grim….
0
2
4
6
0
2
4
6
%
World GDPYear-average percentage change
%
Sources: IMF; Maddison database
20102002199419861978
IMF forecasts
1962 19701954
Trading partner growth had been hammered right across the board
0
20
40
60
80
0
20
40
60
80
Trading Partners with Well-below Trend Growth*Share of Australia’s trading partner GDP**
* More than 2 percentage points below rolling 10-year average growth,based on RBA forecasts
** Weighted using output shares at market exchange ratesSources: CEIC; RBA; Thomson Reuters
2009
%%
20021995198819811974
The world witnessed one of the most drastic collapses in trade in economic history
0
100
200
300
400
0
100
200
300
400
World Export ValuesJanuary 1994 = 100
Sources: CEIC; RBA; Thomson Reuters
2009
IndexIndex
200520011997
From an Australian point of view we’ve gone from down under to down wonder…….
The great escape - Australia’s economic performance was a stand out
-8.9
-7.5 -7.2
-6.1 -6.0 -5.9 -5.5 -5.5 -5.2-4.8
-4.2 -4.2-3.8 -3.8 -3.7 -3.5 -3.2
-2.8 -2.5 -2.2 -2.1 -2.0
-0.3
0.6
-10-9-8-7-6-5-4-3-2-101
-10-9-8-7-6-5-4-3-2-101
Finl
and
Taiw
an
Japa
n
Swed
en
Ital
y
Ger
man
y
Czec
h R
epub
lic
Uni
ted
King
dom
Net
herl
ands
Euro
Zon
e
Spai
n
Bel
gium
Uni
ted
Stat
es
Hon
g Ko
ng S
AR
Port
ugal
Sing
apor
e
Cana
da
Fran
ce
Nor
way
Kore
a
New
Zea
land
Swit
zerl
and
Gre
ece
Aus
tral
ia
Per CentPer Cent GDP growth of IMF advanced economies (through-the-year GDP growth - June 2009)
Especially in the labour market
Australia has performed well by OECD standards
The old labour market story in the north atlantic economies is not reflected in the evidence
0
2
4
6
8
10
0
2
4
6
8
10
Unemployment Rate
Sources: CEIC; Thomson Reuters
Euro area
%
US
201020082006200420022000
%
Higher-income Asian economies
The great trade reforms of the past 25 years gave us a good base to withstand the GFC
At times like these, there’s a lot of anxiety about trade issues and globalisation…..
Trade has been associated with higher living standards
Australia’s attitude towards Asia: ‘Once were worriers’ because of the ‘The Tyranny of Distance’
We are now in the right place at the right time: ‘The Tyranny of distance’ has been replaced by ‘The Power of Proximity’
Japan’s economic development has partially driven Australia’s export growth in the past
Now it will be China, India and ASEAN who will drive much of our export growth in the 21st century
China’s demand has helped to promote Australia’s prosperity……
Shanghai of the tiger: China is leading the charge in North Asia
With a little bit of help from my assigned translator
Sent airborne by Australia’s first female Prime Minister….
Doing it tough…with Kate Fischer and Pru Goward
To stimulate or not to stimulate: some fiscal packages have been effective - ‘bamboo shoots’ as much as ‘green shoots’
China – Industrial Production2005=100
60
80
100
120
140
160
180
60
80
100
120
140
160
180
2009
Index
200820072006
Steel
Index
Power generated
Automobiles
2004 2005Source: CEIC
Looking west, there’s room to grow income-wise
GuizhouGansu
YunnanTibetAnhui
JiangxiGuangxiSichuanHainan
QinghaiHunan
NingxiaChongqing
ShaanxiHenanHubei
XinjiangShanxi
HeilongjiangHebei
JilinFujian
LiaoningInner Mongolia
ShandongGuangdong
JiangsuZhejiang
TianjinBeijing
Shanghai
0 50 100 150 200 250 300
China – Regional Income LevelsPer cent of nationwide average in 2008
Source: CEIC
% Eastern Central Western
Exporter confidence in China remained high during the GFC
Even in terms of SMEs China is a chart buster
34%
29%
26%
20%
13%
11%
10%
9%
8%
8%
7%
New Zealand
United States
United Kingdom
Net ASEAN
China
Hong Kong
South Africa
Japan
Malaysia
Phillipines
Singapore
Where the bolly hell are you?
India has shot up like a 2020 game
0
2
4
6
0
2
4
6
Australian Exports to IndiaShare of total, current prices
Source: ABS
Share of merchandise exports
% %
Share of services exports
04/05 08/0900/0196/9792/93
Gilly is going into bat for the ‘Gong
Australia’s financial institutions have remained robust
10
100
1000
10000
10
100
1000
10000
AAA AA AA- A+ A A-
Australia's four largest bank holding companies
Total assets, $US billion, log scale Total assets, $US billion, log scale
Credit ratings of the largest 100 banking groups
Given the GFC and the ‘recession porn’ faced our exporters have been a global surprise package
-40
-30
-20
-10
0
-40
-30
-20
-10
0
Export Volumes Growth*Nine months to June quarter 2009
% %
* Includes June quarter estimates where data are not available** Merchandise onlySources: ABS; Bundesbank; CEIC; National Statistics Office; RBA;Thomson Reuters
A quiet revolution - Australia has built a strong ‘heartland’ of true blue exporters
Non-Exporters ‘Domestic Businesses’
Exporters/ Non-Exporters ‘Opportunistic/ Irregular’
Exporters ‘Heartland’
3333
Short-term prospects: (3 months) Negative export growth but increasingMedium-term prospects: (12 months) Positive export growth and accelerating
Australian exporters kept their nerve
NB: Don’t know responses have been excluded from the analysis
Change in export orders
Net Change
15% (actual)
- 10% (actual)
+ 10% (expected)
+ 40% (expected)
34
Australian exporters were positive about employment
More than half of the exporters (59%) are optimistic regarding their profitability over the next 12 months expecting it to increase.
Almost half of the exporters (47%) are planning to keep the staff numbers the same while 45% of exporters are likely to increase their staff head count.
Wage increases are likely in over two thirds of the exporters (69%).
More than half of the exporters (59%) are optimistic regarding their profitability over the next 12 months expecting it to increase.
Almost half of the exporters (47%) are planning to keep the staff numbers the same while 45% of exporters are likely to increase their staff head count.
Wage increases are likely in over two thirds of the exporters (69%).
Australian exporters and workers were flexible in terms of hours
33.6
33.8
34.0
34.2
34.4
34.6
34.8
33.6
33.8
34.0
34.2
34.4
34.6
34.8
Average Hours WorkedMid-month of quarter
Source: ABS
2009
Hrs
200820072006200520042003
Hrs
Now our trading partner growth has bounced back
East Asia has been an important part of that story
The emerging economies are really geeing up the G7
There’s plenty of action for Australian exporters in the emerging world (source: UBS)
30
40
50
60
70
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Advanced
Developing
% share of goods exports
Developing ex China
Easy rider: Steppe-ing out in Mongolia
Australia’s strength in Asia is a good story for northern hemisphere investors
A good airport economist knows that Australian exports are well diversified
Taking a walk on the supply side
There are now new challenges that require skillful economic management
Demography is destiny?
l l l 0
20
40
l l l0
600
50
100
600
Population
Source: United Nations
mChina Japan
KoreaIndiamm
m
2045
Total
Workingage
1 200
1 200
2020199519702045202019951970
Japan: Land of the greying sun?
China: getting old before they get rich?
India: Poppadom preach?
Many experienced exporters have survived crises before
4%
21%
17%20%
37%
up to 5 years 5 to 9 years 10 to 14 years 15 to 19 years 20+ years
SOURCE: Sensis® Business Index
Despite some Gen X and Gen Y growth, global SMEs are mainly run by baby- boomers
13%
20%
39%
27%
1%
up to 30 years 31 to 40 years 41 to 50 years 51 to 60 years 60+ years
The GFC shook most of the world….
In Australia we’ve been successful as we’ve married an open economy to successful social reform
One big happy free trade agreement……
Down Under to Down Wonder – an Open Australia weathers the Global storm