Australia: Innovation, pragmatism, common sense
the staged withdrawal of the stimulus to proceed from the December quarter this year.”
Craig James, chief equities economist at Commonwealth Securities, added: “Without a doubt Australia currently has the strongest economy of any developed or advanced nation. While other economies have been wallowing in recession, Australia has defied the global trend.”
RBA governor Glenn Stevens already has signaled he thinks the weakness in the economy as a result of the global downturn will prove to be a mild episode, falling short of the doom scenarios popular in late 2008. Economists said the road is clear for Stevens to make the RBA among the first central banks globally to tighten policy.
Fueling growth in the second quarter was a 0.8 percent rise in household and government consumption. Working against growth was a record rundown in company inventories. although economists said this reflected an inability of firms to keep up with rising consumer demand.
Australia’s exports
(Note: the figures are correct to April 2009)
Key points
- The monthly trade surplus narrowed to AUS$417 million in December 2008 (current prices) — this follows a (revised) trade surplus of AUS$778 million in November.
- Japan is Australia’s largest export market, accounting for AUS$50.6 billion in 2008 (free on board value terms). This is followed by China (AUS$32.5 billion), Republic of Korea (AUS$18.5 billion) and India (AUS$13.5 billion).
- Resource and manufactured export volumes have continued to expand strongly over the past year and services sector export volumes have also contributed strongly.
- ABARE forecasts that earnings from Australia’s commodity exports will fall by 17 percent to AUS$161.7 billion in 2009-10, compared with an estimated rise of 33 percent to AUS$195.7 billion in 2008-9. This expected fall in earnings largely reflects a forecast decline in earnings from mineral resources. Earnings from farm exports are forecast to increase in 2008-9 and 2009-10.
- The Australian dollar, measured by the RBA’s trade weighted index has depreciated strongly in recent months. The depreciation of the exchange rate, however, has coincided with a significant improvement in Australia’s net trade position, with exports remaining solid while imports have declined.
Facts and figures
- The monthly trade surplus (current prices) — as reported in the ABS international trade in goods and services publication — totaled AUS$417 million in December 2008, down from a AUS$778 million trade surplus recorded in November. Australia recorded a trade deficit of AUS$1.6 billion in December 2007.
- Total exports declined by 5.0 percent in December 2008 in value terms to AUS$24.2
