global financial crises in australia

The Global Financial CrisisIN AUSTRALIA

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Outline

Pre-crisis Economic & Financial Market Conditions

The Impact of the Global Financial Crisis

The Policy Response to the Financial Crisis

The Economic Outlook Tasmania and the Crisis Medium term challenges and

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Chart 1: World Economic Growth

Source: IMF and Treasury.

0

1

2

3

4

5

6

1997 1999 2001 2003 2005 20070

1

2

3

4

5

6

Average World Growth since 1980 = 3.3 per cent

Per cent Per cent


4

Chart 2: Merchandise World Trade

Source: World Trade Organization (WTO)

100

115

130

145

160

175

Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09

100

115

130

145

160

175Index Index

5

Chart 3: US & Australia Stock Prices

Source: Thomson Reuters

2000

3000

4000

5000

6000

7000

8000

Oct-2002 Oct-2003 Oct-2004 Oct-2005 Oct-2006 Oct-2007 Oct-2008 Oct-2009

600

800

1000

1200

1400

1600

1800

ASX200 (LHS)

S&P500 (RHS)

Collapse of Lehman Bros.

Index Index

6

Chart 4: Corporate Bond Spreads

Note: Find data that shows narrowing of spread, then widening, and then gradual reduction.

Source: Bloomberg.

0

300

600

900

1200

1500

Sep-02 Jul-03 Apr-04 Feb-05 Nov-05 Sep-06 Jul-07 Apr-08 Feb-09 Nov-09

0

300

600

900

1200

1500Basis point Basis point

AA

BB

B


7

Chart 5: Commodity Price Index

Note: To be changed to RBA Commodity Price Index

Source: Reserve Bank of Australia.

0

63

125

188

250

Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09

0

35

70

105

140

Index of Base Metals Prices (LHS)

Index of non-Rural Commodity Prices

Index Index

8

Chart 6: Terms of Trade

Source: ABS Catalogue Number 5302.0 and Treasury.

Note: Only latest forecast needed

50

70

90

110

130

1992-93 1994-95 1996-97 1998-99 2000-01 2002-03 2004-05 2006-07 2008-09

50

70

90

110

130Index (2006-07 = 100) Index (2006-07 = 100)


9

Chart 7: Industrial Production

Note: Other East Asia* excludes Vietnam, Hong Kong, China and Japan.Source: Relevant National Statistical Agencies and Treasury calculations.

United States euro area

China Other East Asia and Japan

90

95

100

105

110

Sep-00 Mar-02 Sep-03 Mar-05 Sep-06 Mar-08 Sep-09

90

95

100

105

110Index (2000 = 100) Index (2000 = 100)

80

90

100

110

120

Aug-00 Feb-02 Aug-03 Feb-05 Aug-06 Feb-08 Aug-09

80

90

100

110

120Index (2000 = 100) Index (2000 = 100)

0

100

200

300

400

Sep-00 Mar-02 Sep-03 Mar-05 Sep-06 Mar-08 Sep-09

0

100

200

300

400Index (2000 = 100) Index (2000 = 100)

70

95

120

145

170

Aug-00 Feb-02 Aug-03 Feb-05 Aug-06 Feb-08 Aug-09

70

95

120

145

170

Other East Asia*

Japan

Index (2000 = 100) Index (2000 = 100)


10

Chart 8: IMF 2009 GDP GrowthAdvanced World

-4

-2

0

2

4

Apr-08 Oct-08 Apr-09 Oct-09

-4

-2

0

2

4Per cent Per cent

-4

-2

0

2

4

Apr-08 Oct-08 Apr-09 Oct-09

-4

-2

0

2

4Per cent Per cent

Source: International Monetary Fund.arifanees.com - Information - Inspiration - Transformation 10

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0

5

10

15

20

25

30

Recession Recovery Expansion

0

5

10

15

20

25

30

OECDFinancial crisisHighly synchronisedFinancial crises that are synchronised

No of quarters No of quarters

Chart 9: IMF research on dynamicsof recession and recovery

Source: International Monetary Fund.

Duration Amplitude

-5

0

5

10

15

20

25

Recession Recovery Expansion

-5

0

5

10

15

20

25

OECDFinancial crisisHighly synchronisedFinancial crises that are synchronised

Per cent Per cent


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Chart 10: Official Cash Rate

Source: Reserve Bank of Australia and Treasury.

2.5

3.5

4.5

5.5

6.5

7.5

Aug-96 Nov-97 Feb-99 May-00 Aug-01 Nov-02 Feb-04 May-05 Aug-06 Nov-07 Feb-09

2.5

3.5

4.5

5.5

6.5

7.5

Policy rate

Average since August 1996

Per cent Per cent


13

Chart 11: Interest Rates

2

3

4

5

6

7

8

9

10

11

Aug-96 Feb-98 Aug-99 Feb-01 Aug-02 Feb-04 Aug-05 Feb-07 Aug-08

2

3

4

5

6

7

8

9

10

11

Cash rate

Standard Variable Mortgage

Small Business Residentially Secured

Per cent Per cent

Source: Reserve Bank of Australia and Treasury.arifanees.com - Information - Inspiration - Transformation 13

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Chart 12: Exchange Rates

Source: Reserve Bank of Australia.

0.50

0.60

0.70

0.80

0.90

1.00

Jan-08 May-08 Sep-08 Jan-09 May-09Sep-09

0.50

0.60

0.70

0.80

0.90

1.00

$US/AUS

$US $US

50.0

55.0

60.0

65.0

70.0

75.0

Jan-08 May-08Sep-08 Jan-09 May-09 Sep-09

50.0

55.0

60.0

65.0

70.0

75.0

TWI

Index Index


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Chart 13: Composition of stimulus

Source: Treasury.

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2nd Half2008

1st Half2009

2nd Half2009

1st Half2010

2nd Half2010

1st Half2011

2nd Half2011

1st Half2012

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

Transfers COAG reforms Investment

Per cent of annual GDP Per cent of annual GDP


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Chart 14: Estimated Impact of Stimulus: GDP


96

98

100

102

104

106

108

Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11

96

98

100

102

104

106

108

Pre-stimulus

Post-stimulus

Forecasts

Index (Sep 08 = 100) Index (Sep 08 = 100)

Forecasts


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Chart 15: Estimated Impact of Stimulus: unemployment rate


0

2

4

6

8

10

Jun-07 Jun-08 Jun-09 Jun-10 Jun-11

0

2

4

6

8

10

Pre-stimulus

Post-stimulus

Forecasts

Per cent Per cent

Forecasts


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Chart 16: Contribution of fiscal stimulus to GDP Growth

Source: Treasury.

-0.8

-0.4

0.0

0.4

0.8

1.2

Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11

-0.8

-0.4

0.0

0.4

0.8

1.2Percentage points Percentage points


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Chart 17: International Comparison of GDP growth (year to June 2009)

Source: International Monetary Fund.

-10

-8

-6

-4

-2

0

2

Slo

ven

ia

Fin

lan

d

Ta

iwa

n

Ire

lan

d

Jap

an

De

nm

ark

Sw

ed

en

Italy

Ge

rma

ny

UK

Slo

vaki

a

Lu

xem

bo

urg

Ne

the

rla

nd

s

Cze

ch R

ep

.

No

rwa

y

Au

stri

a

Sp

ain

US

Ho

ng

Ko

ng

Be

lgiu

m

Po

rtu

ga

l

Sin

ga

po

re

Ca

na

da

Ice

lan

d

Ma

lta

Fra

nce

Ko

rea

NZ

Sw

itze

rla

nd

Cyp

rus

Isra

el

Gre

ece

Au

stra

lia

-10

-8

-6

-4

-2

0

2Per cent Per cent


20

Chart 18: Unemployment rate

Source: ABS Catalogue Number 6202.0, Thomson Reuters and Treasury.

Note: Need to include OECD average

3

5

7

9

11

13

Jun-88 Mar-94 Dec-99 Sep-05 Jun-11

3

5

7

9

11

13

Australia

OECD

Per cent Per cent


Chart 19: ConfidenceBusinessesConsumers

Source: Westpac-Melbourne Institute, National Australia Bank, DX and OECD.

-5

-4

-3

-2

-1

0

1

2

Nov-06 Nov-07 Nov-08 Nov-09

-5

-4

-3

-2

-1

0

1

2

Australia

OECD

Standard deviations from long-run average

-5

-4

-3

-2

-1

0

1

2

Oct-06 Oct-07 Oct-08 Oct-09

-5

-4

-3

-2

-1

0

1

2

Australia

OECD

Standard deviations from long-run average


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Chart 20: Retail Trade in Australia and major advanced economies

90

95

100

105

110

Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09

90

95

100

105

110

G7

Australia

Index (Jan 08 = 100) Index (Jan 08 = 100)

Source: ABS Catalogue Number 8501.0 and Thomson Reuters.arifanees.com - Information - Inspiration - Transformation 22

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Chart 21: Australian Retail Trade

Source: ABS Catalogue Number 8501.0.

17

18

19

20

Oct-07 Apr-08 Oct-08 Apr-09 Oct-09

17

18

19

20

Seasonally adjusted Trend

$billions $billions


24

Chart 22: Construction Work Done


20

22

24

26

28

30

Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09

4

6

8

10

12

14

Private (LHS)

Public (RHS)

$billion $billion


25

Chart 23: China GDP

Source: CEIC China database and Treasury..

0

3

6

9

12

15

1995 1997 1999 2001 2003 2005 2007 2009 2011

0

3

6

9

12

15Per centPer cent

Forecasts


26

Chart 24: GDP growth


-4

-2

0

2

4

6

8

1977-78 1983-84 1989-90 1995-96 2001-02 2007-08 2013-14

-4

-2

0

2

4

6

8

30-year average

80s recovery 90s recovery

Forward estimates

Per cent Per cent


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Chart 25: Domestic Final Demand


-2

0

2

4

6

8

10

Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09

-2

0

2

4

6

8

10

Australia

Tasmania

Queensland

Per cent Per cent


28

Chart 26: Unemployment rate


3

4

5

6

7

Oct-07 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09

3

4

5

6

7

Tasmania

Australia

Queensland

Per cent Per cent


29

Chart 27: Trend Unemployment

0

2

4

6

8

10

12

14

Feb-78 Apr-81 Jun-84 Aug-87 Oct-90 Dec-93 Feb-97 Apr-00 Jun-03 Aug-06 Oct-09

0

2

4

6

8

10

12

14

Australia

Tasmania

Per cent Per cent

Source: ABS Catalogue Number 6202.0.arifanees.com - Information - Inspiration - Transformation 29

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Chart 28: Gross Household disposable income per capita (current prices)


$0

$5

$10

$15

$20

$25

$30

$35

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

$0

$5

$10

$15

$20

$25

$30

$35

Tasmania

Australia

$'000 per capita $'000 per capita


31

Chart 29: Employment to Population Ratio


50.0

52.5

55.0

57.5

60.0

62.5

65.0

Oct-79 Oct-84 Oct-89 Oct-94 Oct-99 Oct-04 Oct-09

50.0

52.5

55.0

57.5

60.0

62.5

65.0

Tasmania

Australia

Per cent Per cent


32

Chart 30: Full Time Employment to Population Ratio

35.0

40.0

45.0

50.0

55.0

60.0

65.0

Oct-79 Oct-84 Oct-89 Oct-94 Oct-99 Oct-04 Oct-09

35.0

40.0

45.0

50.0

55.0

60.0

65.0

Tasmania

Australia

Per cent Per cent

Source: ABS Catalogue Number 6202.0.arifanees.com - Information - Inspiration - Transformation 32

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Chart 31: Observed Changes in Rainfall Reliability

Source: Bureau of Rural Sciences.arifanees.com - Information - Inspiration - Transformation 33

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Chart 32: Population settlement patterns

Source: Center for International Earth Science Information Network 2005, Columbia University;and Centro Internacional de Agricultura Tropical (CIAT). Gridded Population of the World,Version 3. Palisades, NY: CIESIN, Columbia University.


35

Chart 33: China, India Convergence

Source: The Conference Board Total Economy Database, IMF and Treasury.

0

20

40

60

80

100

0 4 8 12 16 20 24 28 32 36 40 44 48 52

0

20

40

60

80

100

Japan (1955-2008)

NIEs (1968-2008)

ASEAN-4 (1973-2008)

China (1980-2008)

India (1982-2008)

Years after take-off

Per cent of US GDP per capita ($PPP) Per cent US GDP per capita ($PPP)


global financial crises in australia

Economy & Finance