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….
World GDP
Year-average percentage change
%
%
 IMF forecasts
6
6
4
4
2
2
0
0
2010
1954
1962
1970
1978
Sources: IMF; Maddison database
1986
1994
2002
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
The world witnessed one of the most drastic collapses in
trade in economic history
World Export Values
January 1994 = 100
Index
Index
400
400
300
300
200
200
100
100
0
1997
2001
Sources: CEIC; RBA; Thomson Reuters
2005
0
2009
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
0.6
(through-the-year GDP growth - June 2009)
-0.3
-6.1 -6.0 -5.9
-7.5
-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
-7.2
Australia
Greece
Switzerland
New Zealand
Korea
Norway
France
Canada
Singapore
Portugal
Hong Kong SAR
United States
Belgium
Spain
Euro Zone
Netherlands
United Kingdom
Czech Republic
Germany
Italy
Sweden
Japan
Taiwan
-8.9
Finland
1
0
-1
-2
-3
-4
-5
-6
-7
-8
-9
-10
Per Cent
GDP growth of IMF advanced economies
Per Cent
1
0
-1
-2
-3
-4
-5
-6
-7
-8
-9
-10
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
Unemployment Rate
%
%
10
10
Euro area
8
8
US
6
6
4
4
Higher-income Asian economies
2
2
0
0
2000
2002
2004
Sources: CEIC; Thomson Reuters
2006
2008
2010
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distance’ has been replaced by ‘The Power of Proximity’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 Production
2005=100
Index
Index
180
180
Automobiles
160
160
140
140
120
120
Steel
Power generated
100
100
80
60
80
2004
Source: CEIC
2005
2006
2007
2008
2009
60
Looking west, there’s room to grow income-wise
China – Regional Income Levels
Per cent of nationwide average in 2008
Shanghai
Beijing
Tianjin
Zhejiang
Jiangsu
Guangdong
Shandong
Inner Mongolia
Liaoning
Fujian
Jilin
Hebei
Heilongjiang
Shanxi
Xinjiang
Hubei
Henan
Shaanxi
Chongqing
Ningxia
Hunan
Qinghai
Hainan
Sichuan
Guangxi
Jiangxi
Anhui
Tibet
Yunnan
Gansu
Guizhou
0
50
100
 Eastern
Source: CEIC
150
%
 Central
200
250
 Western
300
Exporter confidence in China remained high during the GFC
South & Central America (n=107)
63%
25%
11%
South East Asia (ASEAN) (n=285)
62%
27%
11%
China (n=193)
61%
India and other South Asia (n=129)
59%
Africa (n=114)
59%
Hong Kong (n=139)
51%
Europe (n=222)
50%
Middle East (n=145)
49%
Taiwan (n=73)
46%
Pacific (n=112)
46%
UK (n=207)
43%
Korea (n=94)
42%
Japan (n=129)
26%
36%
15%
10%
35%
25%
54%
New Zealand (n=233)
13%
27%
55%
North America (n=291)
12%
27%
21%
12%
37%
31%
19%
25%
26%
12%
42%
14%
40%
21%
36%
41%
16%
36%
28%
Increase
Stay same
Decrease
Even in terms of SMEs China is a chart buster
New Zealand
34%
United States
29%
United Kingdom
26%
Net ASEAN
20%
China
13%
Hong Kong
11%
South Africa
10%
Japan
9%
Malaysia
8%
Phillipines
8%
Singapore
7%
Where the bolly hell are you?
India has shot up like a 2020 game
Australian Exports to India
Share of total, current prices
%
%
6
6
4
4
Share of merchandise exports
2
2
Share of services exports
0
92/93
Source: ABS
96/97
00/01
04/05
0
08/09
Gilly is going into bat for the ‘Gong
Australia’s financial institutions have remained robust
Credit ratings of the largest 100 banking groups
Total assets, $US billion, log scale
10000
Total assets, $US billion, log scale
10000
Australia's four largest bank holding
companies
1000
1000
100
100
10
10
AAA
AA
AA-
A+
A
A-
Given the GFC and the ‘recession porn’ faced our exporters
have been a global surprise package
Export Volumes Growth*
Nine months to June quarter 2009
%
%
0
0
-10
-10
-20
-20
-30
-30
-40
-40
* Includes June quarter estimates where data are not available
** Merchandise only
Sources: 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’
Australian exporters kept their nerve
Change in export orders
Net Change
Last 12 mths
(n=844)
Last 3 mths
(n=846)
Next 3 mths
(n=812)
47%
21%
32%
15% (actual)
29%
32%
43%
39%
24%
- 10% (actual)
33%
+ 10% (expected)
+ 40% (expected)
Next 12 mths
(n=800)
60%
Increase
19%
Stay the same
Short-term prospects: (3 months)
Medium-term prospects: (12 months)
NB: Don’t know responses have been excluded from the analysis
g
g
20%
Decrease
Negative export growth but increasing
Positive export growth and accelerating
33
Australian exporters were positive about employment
Company profitability
Wage increase
Number of employees
Decrease
8%
Decrease
25%
Stay same
Yes
47%
69%
Increase
59%
No
31%
Increase
45%
Stay same
16%
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%).
34
Australian exporters and workers were flexible in terms
of hours
Average Hours Worked
Mid-month of quarter
Hrs
Hrs
34.8
34.8
34.6
34.6
34.4
34.4
34.2
34.2
34.0
34.0
33.8
33.8
33.6
2003
Source: ABS
2004
2005
2006
2007
2008
2009
33.6
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)
70
% share of goods exports
Developing
60
50
Advanced
40
Developing ex China
30
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
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?
Population
m
China
m
Japan
100
1 200
Total
50
600
Working
age
m
India
m
Korea
1 200
40
600
20
0
l
1970
l
1995
Source: United Nations
l
2020
l
2045 1970
l
1995
l
2020
0
2045
Japan: Land of the greying sun?
China: getting old before they get rich?
India: Poppadom preach?
Many experienced exporters have survived crises
before
37%
21%
20%
17%
4%
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
39%
27%
20%
13%
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