Down Under to Down Wonder – an Open Australia weathers the Global storm.
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Transcript of Down Under to Down Wonder – an Open Australia weathers the Global storm.
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Down Under to Down Wonder – an Open Australia weathers the Global storm
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Over the past few years the global economy has been a fascinating place….
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Not so long ago things were looking pretty grim….
0
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0
2
4
6
%
World GDPYear-average percentage change
%
Sources: IMF; Maddison database
20102002199419861978
IMF forecasts
1962 19701954
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Trading partner growth had been hammered right across the board
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20
40
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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
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The world witnessed one of the most drastic collapses in trade in economic history
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0
100
200
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World Export ValuesJanuary 1994 = 100
Sources: CEIC; RBA; Thomson Reuters
2009
IndexIndex
200520011997
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From an Australian point of view we’ve gone from down under to down wonder…….
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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)
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Especially in the labour market
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Australia has performed well by OECD standards
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The old labour market story in the north atlantic economies is not reflected in the evidence
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4
6
8
10
0
2
4
6
8
10
Unemployment Rate
Sources: CEIC; Thomson Reuters
Euro area
%
US
201020082006200420022000
%
Higher-income Asian economies
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The great trade reforms of the past 25 years gave us a good base to withstand the GFC
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At times like these, there’s a lot of anxiety about trade issues and globalisation…..
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Trade has been associated with higher living standards
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Australia’s attitude towards Asia: ‘Once were worriers’ because of the ‘The Tyranny of Distance’
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We are now in the right place at the right time: ‘The Tyranny of distance’ has been replaced by ‘The Power of Proximity’
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Japan’s economic development has partially driven Australia’s export growth in the past
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Now it will be China, India and ASEAN who will drive much of our export growth in the 21st century
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China’s demand has helped to promote Australia’s prosperity……
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Shanghai of the tiger: China is leading the charge in North Asia
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With a little bit of help from my assigned translator
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Sent airborne by Australia’s first female Prime Minister….
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Doing it tough…with Kate Fischer and Pru Goward
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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
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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
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Exporter confidence in China remained high during the GFC
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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
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Where the bolly hell are you?
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India has shot up like a 2020 game
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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
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Gilly is going into bat for the ‘Gong
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Australia’s financial institutions have remained robust
10
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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
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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
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A quiet revolution - Australia has built a strong ‘heartland’ of true blue exporters
Non-Exporters ‘Domestic Businesses’
Exporters/ Non-Exporters ‘Opportunistic/ Irregular’
Exporters ‘Heartland’
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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)
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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%).
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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
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Now our trading partner growth has bounced back
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East Asia has been an important part of that story
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The emerging economies are really geeing up the G7
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There’s plenty of action for Australian exporters in the emerging world (source: UBS)
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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
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Easy rider: Steppe-ing out in Mongolia
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Australia’s strength in Asia is a good story for northern hemisphere investors
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A good airport economist knows that Australian exports are well diversified
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Taking a walk on the supply side
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There are now new challenges that require skillful economic management
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Demography is destiny?
l l l 0
20
40
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600
50
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600
Population
Source: United Nations
mChina Japan
KoreaIndiamm
m
2045
Total
Workingage
1 200
1 200
2020199519702045202019951970
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Japan: Land of the greying sun?
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China: getting old before they get rich?
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India: Poppadom preach?
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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
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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
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The GFC shook most of the world….
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In Australia we’ve been successful as we’ve married an open economy to successful social reform
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One big happy free trade agreement……
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Down Under to Down Wonder – an Open Australia weathers the Global storm