Down Under to Down Wonder Australia and the Global Economy in a post GFC world. www.aiec.idp.com 1
I travel so much around the world, I feel like an Airport Economist Sent airborne by Australia s first female Prime Minister. www.aiec.idp.com 2
Love thy neighbour: Everybody loves Raymond Shanghai of the tiger: China is leading the charge in North Asia www.aiec.idp.com 3
With a little bit of help from my assigned translator Doing it tough with Natalie Bassingthwaighte www.aiec.idp.com 4
Doing it tough with Kate Fischer and Pru Goward Where the bolly hell are you? www.aiec.idp.com 5
Gilly is going into bat for the Gong www.aiec.idp.com 6
The Gilly Effect trends in interstate migration Tim Tams to Tel Aviv www.aiec.idp.com 7
Israeli innovation is always looking for a better place Free (trade) Nelson Mandela www.aiec.idp.com 8
Doing it tough with Miss South Africa www.aiec.idp.com 9
First half Socceroos versus Germany. But things got better for the Socceroos and Bafana Bafana.. www.aiec.idp.com 10
From Rio to Freo: the world is going nuts for Brazil www.aiec.idp.com 11
Working hard in Santa Fe near Medellin, Colombia The last few years have been an amazing time to observe the global economy www.aiec.idp.com 12
Not so long ago things were looking pretty grim. % 6 World GDP Year-average percentage change IMF forecasts % 6 4 4 2 2 0 1954 1962 1970 1978 1986 1994 2002 0 2010 Sources: IMF; Maddison database Trading partner growth had been hammered right across the board Trading Partners with Well-below Trend Growth* % Share of Australia s trading partner GDP** % 80 80 60 60 40 40 20 20 0 1974 1981 1988 1995 2002 * More than 2 percentage points below rolling 10-year average growth, based on RBA forecasts ** Weighted using output shares at market exchange rates Sources: CEIC; RBA; Thomson Reuters 0 2009 www.aiec.idp.com 13
The world witnessed one of the most drastic collapses in trade in economic history From an Australian point of view we ve gone from down under to down wonder. www.aiec.idp.com 14
Finland Taiwan Japan Sweden Italy Germany Czech Republic United Kingdom Netherlands Euro Zone Spain Belgium United States Hong Kong SAR Portugal Singapore Canada France Norway Korea New Zealand Switzerland Greece Australia The great escape - Australia s economic performance was a stand out 1 0-1 -2-3 -4-5 -6-7 -8-9 -10 Per Cent -8.9-7.5-7.2 GDP growth of IMF advanced economies (through-the-year GDP growth - June 2009) -6.1-6.0-5.9-5.5-5.5-5.2-4.8-2.8-2.5-2.2-2.1-2.0-4.2-4.2-3.8-3.8-3.7-3.5-3.2 Per Cent 0.6-0.3 1 0-1 -2-3 -4-5 -6-7 -8-9 -10 And things have only got better in relative terms www.aiec.idp.com 15
Especially in the labour market By contrast, workers in the north atlantic economies have been hit very hard % Unemployment Rate % 10 8 6 Euro area US 10 8 6 4 2 Higher-income Asian economies 4 2 0 2000 2002 2004 2006 2008 2010 0 Sources: CEIC; Thomson Reuters www.aiec.idp.com 16
Our unemployment is now well below the G7 average The great trade reforms of the past 25 years gave us a good base to withstand the GFC www.aiec.idp.com 17
At times like these, there s a lot of anxiety about trade issues and globalisation.. Trade has been associated with higher living standards www.aiec.idp.com 18
To stimulate or not to stimulate: some fiscal packages have been effective - bamboo shoots as much as green shoots China has helped pull along Australia s recovery www.aiec.idp.com 19
Australia s financial institutions have remained robust Credit ratings of the largest 100 banking groups 10000 Total assets, $US billion, log scale Australia's four largest bank holding companies Total assets, $US billion, log scale 10000 1000 1000 100 100 10 AAA AA AA- A+ A A- 10 Given the GFC and the recession porn faced our exporters have been a global surprise package www.aiec.idp.com 20
Australian exporters kept their nerve Change in export orders Last 12 mths (n=844) 47% 21% 32% Net Change 15% (actual) Last 3 mths (n=846) 29% 32% 39% - 10% (actual) Next 3 mths (n=812) 43% 24% 33% + 10% (expected) Next 12 mths (n=800) 60% 19% 20% + 40% (expected) Increase Stay the same Decrease Short-term prospects: (3 months) g Negative export growth but increasing Medium-term prospects: (12 months) g Positive export growth and accelerating NB: Don t know responses have been excluded from the analysis 41 They kept the faith - particularly in Asia www.aiec.idp.com 21
The emerging markets now hold the top rankings with Latin American & Africa joining Asia The GFC left export orders to emerging markets relatively unscathed www.aiec.idp.com 22
According to HSBC s recent Trade Confidence Index, the Great Recovery is an emerging market story.. Now our trading partner growth has bounced back www.aiec.idp.com 23
East Asia has been an important part of that story The emerging economies are really geeing up the G7 www.aiec.idp.com 24
There s plenty of action for Australian exporters in the emerging world (source: UBS) 70 % share of goods exports 60 Developing 50 Advanced 40 30 Developing ex China 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Easy rider: Steppe-ing out in Mongolia www.aiec.idp.com 25
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 www.aiec.idp.com 26
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 21 st century www.aiec.idp.com 27
Looking west, there s room to grow income-wise India has shot up like a 2020 game Australian Exports to India Share of total, current prices % % 6 6 4 4 2 Share of merchandise exports Share of services exports 2 0 92/93 Source: ABS 96/97 00/01 0 04/05 08/09 www.aiec.idp.com 28
Even an education focussed story about exports to China and India www.aiec.idp.com 29
The rush that never ended? Mining investment is running at unprecedented levels Mining Investment Share of nominal GDP, fiscal years % % 4 4 3 3 2 2 1 1 0 1969 Sources: ABS; RBA 1979 1989 0 1999 2009 www.aiec.idp.com 30
The terms of trade effects have substantial effects on real income Services has a good story to tell in terms of export volumes www.aiec.idp.com 31
Take a walk on the supply side Investment in education and training matters right across the board www.aiec.idp.com 32
There are now new challenges that require skillful economic management www.aiec.idp.com 33
Old Europe is creating challenges for the rest of the continent Demography is destiny? Population m China Japan m 1 200 Total 100 600 m Working age India Korea 50 m 1 200 40 600 20 0 l l l 1970 1995 2020 Source: United Nations l l l 0 2045 1970 1995 2020 2045 www.aiec.idp.com 34
Japan: Land of the greying sun? China: getting old before they get rich? www.aiec.idp.com 35
India: Poppadom preach? Many experienced exporters have survived crises before 37% 21% 17% 20% 4% up to 5 years 5 to 9 years 10 to 14 years 15 to 19 years 20+ years SOURCE: Sensis Business Index www.aiec.idp.com 36
Despite some Gen X and Gen Y growth, global SMEs are mainly run by baby- boomers 39% 27% 20% 13% 1% up to 30 years 31 to 40 years 41 to 50 years 51 to 60 years 60+ years www.aiec.idp.com 37
The GFC shook most of the world. www.aiec.idp.com 38
Our education sector is the key to locking in our future competitiveness, living standards and economic prosperity One big happy free trade agreement www.aiec.idp.com 39
Down Under to Down Wonder Australia and the Global Economy in a post GFC world. www.aiec.idp.com 40