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AUSTRALIA'S ECONOMY

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AUSTRALIA'S ECONOMY Powered By Docstoc
					AUSTRALIA’S ECONOMY
Agron/Econ 496 Sergio Lence
February, 2008

Australian Economy
 Prosperous, Western-style market economy


World Bank classification:


Low-income economies
 53 countries (e.g., Haiti)



Lower-middle income economies
 55 countries (e.g., Guatemala)



Upper-middle income economies
 41 countries (e.g., Mexico)



High-income economies
 60 countries (e.g., Australia)

Composition of GDP (%)
Australia 3.7 25.6 70.7 U.S. 0.9 20.6 78.5

 Agriculture

 Industry
 Services

Composition of Exports (%)
Australia  Minerals and Metals 60  Rural Goods 17  Manufactured Goods 18 U.S. ? 9 82

Australian Economy
 Major economic reforms starting in the 1980s  First reform: Labor Party’s floating of AUD in 1983  Free-trade agreements and reduction of trade barriers  Financial sector deregulation, including 1992 access for foreign bank branches  Rationalization and reduction of trade unions  Restructuring of centralized system of industrial relations and labor bargaining  Better integration of individual state economies into federal system  Improvement and standardization of national infrastructure  Privatization (e.g., Australian Wheat Board)

AUSTRALIA: Annual Changes in GDP and CPI

CPI

GDP

Australian Economy
 Current concerns

   

Large current account deficit Absence of export-oriented manufacturing industry Real estate bubble High levels of net foreign debt owed by the private sector Pressure on environment

POPULATION, 2004

 Australia  United States

 China
 India  World

20 million 294 million 1,300 million 1,073 million 6,390 million

World Population Density
 Population (bottom) and Internet (top) densities

Australian Population Density
0-100 100-200 200-300 >300

R us s ia n
-0.5 0.5 1.5 0 1 2

Annual Population Growth, 1992-2005
 U.S.  Australia

1.16% per year 1.12% per year

Fe de r C ze H atio ch un n R ga ep ry Sl ub ov ak Po lic R lan ep d ub lic G Ita er ly m a Ja ny Be p a U lg n ni i te Fi um d nl Ki an ng d Sw dom ed Au en D str en ia m ar EU k Fr 15 an G ce re P e N or ce et tu he ga rla l N nds Sw o i rw O tze ay EC rla D nd To t Ko al re Sp a a C in hi Ic na el a Lu Ca nd xe na U m d ni b a te o N d S urg ew t Ze ate a s Au lan st d ra Ire lia la n Br d az Tu il rk So M ey ex ut i h co Af ric a In di a

-0.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4

 U.S.

 Australia

Net Immigration Rate, 2000-2005

Sl

Po

0.58% of total population 0.40% of total population

la ov T nd ak ur R key ep ub Fi lic nl a H nd un g D ar en y m a C ze F rk ch ra R nce N epu et he blic rla U G nd ni te erm s d Ki any ng do N m or w Sw ay ed G en O re EC e U D ce ni te Tot d a Lu St l xe ate m s bo u N Au rg ew s Ze tria Sw ala itz nd er l Au and st r Po alia rtu C gal an ad a Ita Ire ly la nd Sp ai n

10

15

20

25

0

5

Po la nd

 U.S.

Sl Tu ov rk ak ey R ep ub lic Ita ly

 Australia

Foreign-Born Population, circa 2000

Fi nl an d H un C ze ga ch ry R ep ub lic Po rtu ga l

23% 11%

Nationals (citizens)

Sp ai n D en m ar k N O or EC w ay D av er ag e Ire la nd Fr an N ce et he rla nd s G re ec e Be lg iu m Au U st ni ria te d St at es Sw ed en C an Sw ada itz er la n Au d st ra lia

Non-nationals (non-citizens)

 U.S.

 Australia

1 000

1 500

2 000

2 500

3 000

3 500

4 000

500

Gross Domestic Product, 2005 (billion U.S. dollars, PPP)

0

700 12,400

Lu Sl xe ISL ov m ak bo R ur N ep g ew u b Ze lic al an Ire d la n Fi d nl a H nd un g D ary en m a C ze Po rk ch rtu R ga ep l ub N lic Sw orw itz ay er la n Au d st Sw ria ed e G n re e Be ce lg iu Po m la n Tu d N et rke he y rla Au nds st ra lia Ko r C ea an ad M a ex ic o Sp ai n Ita U ly ni te Fra d K nce in gd G om er m an y Ja pa n U ni EU te d 15 S ta te s

World Gross Domestic Product (1999)

Earth’s Satellite Picture at Night

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

Tu

0

rk

 U.S.

 Australia

M

Per Capita GDP and GNP, 2005 (U.S. dollars, PPP)

GNP

GDP

34,200 (GDP) 41,800 (GDP) 32,900 (GNP) 41,700 (GNP)

ey ex ic Sl ov P o ol ak a R nd ep u H blic un ga C ze Po ry ch rtu R gal ep ub lic N ew Kor Ze ea al an d Sp ai n Ita G ly re ec Fr e a G nce er m an y Ja pa Fi n nl a U Sw nd ni te d ed Ki en ng do Be m lg iu C m an D ada en m Au ark st ra l Au ia N st et he ria Sw rlan itz ds er la n Ic d el an Ire d U ni te lan d St d at es N Lu or xe w a y m bo ur g

 U.S.

 Australia

10000

20000

30000

40000

50000

60000

Per Capita GNI and NNI, 2005 (U.S. dollars, PPP)

0

Gross national income Net national income

32,900 (GNI) 27,700 (NNI) 41,700 (GNI) 36,400 (NNI)

Tu rk e M y ex ic S o lo va Po la k R nd ep ub H lic un ga r C z e Po y ch rtu R gal ep ub lic N K ew or Ze ea al an d S pa in Ita G ly re ec e Ja pa G er n m an Fr y an c Fi e nl a S nd w ed A en us tra B lia el gi um Ire la n U ni Ca d te d nad K in a gd om A us D tria en m ar Ic k N ela et he nd r S lan w itz ds U ni erla te d nd S ta te N s Lu or xe wa m y bo ur g

Nominal GDP vs. PPP GNP

Australian Dollar (AUD, A$, AU$)
 Currency of the Commonwealth of Australia  Includes Australia, Christmas Island, Cocos (Keeling) Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu.  Introduced in 1966  Not only replacing the Australian pound (distinct from the pound sterling since 1929) but also introducing a decimal system.  Sixth-most-traded currency in world foreign exchange

markets (behind U.S. dollar, euro, yen, pound sterling, and swiss franc)


AUD accounts for 4–5% of worldwide foreign exchange transactions.

Monetary Conversion Rates
 AUD per U.S. dollar
2.5 Exchange Rate PPP 2

1.5

1

0.5

0

19 70

19 72

19 74

19 76

19 78

19 80

19 82

19 84

19 86

19 88

19 90

19 92

19 94

19 96

19 98

20 00

20 02

20 04

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

1/2/03 4/2/03 7/2/03 10/2/03 1/2/04 4/2/04 7/2/04 10/2/04 1/2/05 4/2/05 7/2/05 10/2/05 1/2/06 4/2/06 7/2/06 10/2/06 1/2/07 4/2/07 7/2/07 10/2/07 1/2/08
AUD per US$

 AUD per U.S. dollar

Exchange Rate

S
10 0 2 4 6 8

w

 U.S.

 Australia

Real Annual GDP Growth, 1992-2005
3.8% 3.2%

Ja itz pan e G rlan er d m an y Ita Fr ly a B nce el g P ium or tu g A al us D tr N enm ia et he ar rla k C ze S nds ch we R de O ep n E ub C D lic To U ni ta te d Br l Ki az n g il do S Me m ou x th ico Af ric S a p N ain or w U G ay ni re te e d ce St a Fi tes nl a C nd an a N Hu da ew ng Ze ary a A lan R us d us tr si an Ic alia Fe ela de nd ra tio L T n S ux urk l o em e va b y k o R ur ep g ub P lic ol an K d or ea In d Ire ia la n C d hi na

12

15

-3 0 3 6 9

 U.S.

 Australia

Annual Inflation (GDP Deflator), 1992-2005
2.4% 2.1%

Sw Jap itz an er G lan er d m a Au n y st r Fr ia an Sw ce ed Fi en nl a Be nd O EC lgiu D m To Ca tal n De a d Ne n a w ma Un Ze rk ite ala d nd S Eu tate ro s ar e Ne E a th U1 er 5 l Un A and ite us s d tra K li Lu ing a do xe m m bo ur g Ita Ic ly el an d Sp ai Ko n r No e a rw a Ire y la Po nd rtu Cz g ec Gr al ee Sl h R ce ov ak epu Re blic pu b P o lic l Hu and ng a M ry ex ic Tu o rk ey
53.5

Long-Term Interest Rates, 1994-2005
 Australia  U.S.
10 9 8 7 6 5 4 3 2 1 0

6.6% 5.5%
Australia United States Japan United Kingdom Euro area

19 94

19 96

19 98

20 00

20 02

20 04

Unemployment Rates, 1994-2005
 Australia  U.S.
20

6.9% 5.1%

15

10

5

0

l l y y s d s k d d e g e d a n a a d 5 n ly ic en ary da um ic ar lan uga dom lan ota rali ur an ore rwa and stri pa tate bl an U1 Ita anc eec lan pai lan ubl i d a g u r r E bo zerl S Po ep in K No erl Ja S enm ea ort ing Ire D T ust epu we un an elg erm F A G F C S B G d P H R A R em it K D wZ th te EC k u x Sw e ch ni ed Ne O L va e it N U o Cz Un Sl

12

0

3

6

9

-9

-6

-3

 U.S.

 Australia

Government Net BorrowingLending as % of GDP, 2003-2005
1.6% -4.4%

Ja pa G n re e C H ce ze u ch ng R ar U ep y ni te ubl i d St c a Po tes rtu ga l Ita Po ly l G and er m an F y O ra U EC nce ni te D T Sl d K ota ov in l ak gd om R ep u Eu bli ro c N e t a re he a rla nd Au s Sw s itz tria Lu erl xe an m d bo u Be rg lg iu m Sp a C in an ad Ire a la n Ic d el a Sw nd ed Au en st ra lia Ko D rea en m ar N Fin k ew la Ze nd al an N d or w ay

100

120

140

160

180

 U.S.

 Australia

20 1995

40

60

80

0

1.6% -4.4%
2005

Au st ra lia Ko re Ic a N ew ela n Ze d al an D Sl en d ov ak ma r R U e k ni te p u b d Ki lic ng do m Fi nl an d Sp ai n Po la n N d or Sw w itz ay er la n Sw d e N et de he n r U ni lan te d ds St at H es un ga r Au y st r C ia an a G da er m a Po ny rtu ga Fr l a O EC nc D e T Eu ota ro l ar e Be a lg iu m Ita G ly re ec e Ja pa n

Government Debt as % of GDP

S
10 15 20 25 30 0 5

 U.S.

 Australia

Taxes on Income and Profits as % of GDP, 2004
18.2% 11.1%

lo va Me k x R ico ep ub l P ic ol an d K or e Tu a rk G ey re e P ce or tu ga Ja l p H an N ung et he ary rla C G nd ze er s ch m R any ep ub lic S pa U Fr in ni a t e nc d S e ta te Ire s la n O E A d C us D t a ria Lu ve ra xe g m e S bo w u itz rg er la U nd ni te d I K taly in gd om E U C 15 an ad Ic a el an Fi d nl a B nd el g A ium us tra S lia w ed N en N ew orw Ze ay al D an en d m ar k

U ni te d S
10 15 20 25 30 0 5

 U.S.

 Australia

Taxes on Goods and Services as % of GDP, 2004
8.9% 4.7%

ta te s S Ja w pa itz n er la C nd an A ada us tra lia K or ea S G pai er n m a M ny ex ic o Ita Fr ly an B ce el gi um O E C Ire D la a n Lu ve d U xe rag ni m e te b d ou K in rg gd C ze A om ch us R tri N epu a et h b N er lic ew la S lo Z nds va ea k l R and ep ub lic E U 1 P 5 ol a G nd re e S ce w ed N en or w P ay or tu g Fi al nl an Tu d r H key un ga Ic ry e D lan en d m ar k

M
10 0 1 2 3 4 5 6 7 8 9

 U.S.

 Australia

7.1% 6.4%

Household Expenditures in Recreation and Culture as % of GDP, 2004

ex ic o Ire la nd Ko Lu xe re m a bo u H rg un ga Po ry rtu ga l Ita l Po y la nd Sl ov Bel gi ak um R ep N et ubl he ic r Sw lan itz ds er la n G d re ec D en e m ar Fr k an G ce er m an Fi y nl an Sw d ed e C n an ad a Sp ai n C ze No ch rw R ay ep ub lic U Ja ni te pa n d St at e Ic s el an d Au st A ria N ust ew ra li U ni Ze a al te a d Ki nd ng do m

Ic
10 15 0 5

 U.S.

 Australia

Infant Mortality, 2004
4.7 deaths per 1000 live births 6.8 deaths per 1000 live births

el an d Ja pa S w n ed e N n or w a Fi y nl an C d ze S ch p ai R ep n ub lic Lu Fra xe nc m e bo u P rg or tu G ga er l m an G y re ec e N et Ita he l y S rlan w itz ds er la B nd el g D ium en m ar A k us A tria us tra U lia ni te Ire d la K nd in gd o C m an ad O a E C Ko D r a e N ve a ew ra Ze ge al a H nd un ga S ry lo va Po k lan R U ep d ni te ubl d i S c ta te M s ex ic Tu o rk ey

60

65

70

75

80

85

90

S

 U.S.

 Australia

Life Expectancy at Birth, 2004
80.6 years 77.5 years

Tu rk lo Hu ey va n k ga R ep ry ub l P ic ol an C ze M d ch ex R ico ep ub lic K or e U Por a n i tu te g d al S ta D tes en Lu m O xem ark E C bo D u av rg er ag U ni e te Ire d la K nd in gd G om er m a B ny el gi u Fi m nl an G d N re et e h c N erl e ew an Ze d s al an A d us tri a Ita C ly an ad N a or w a Fr y an ce S p A ain us tra S lia w ed e Ic n el S w an it z d er la nd Ja pa n

100

150

200

250

50

Prison Population Rate, 2004

 U.S.

 Australia

0

120 per 100,000 people 725 per 100,000 people
725

Ic el a Ja nd N pan or w Fi ay D nlan en d m S a Sw w rk e itz de er n l G and re e Ire ce Be lan lg d i Fr um G an er ce m a Au ny st ria Ita Tu ly C rke a y Au nad st a r Lu K alia xe o N mb rea et o he u rla rg O EC Po nd D rtu s av ga U er l ni ag te d Sp e Ki a ng in Sl ov H do ak un m N Re gar C ew pu y ze Z b ch ea lic R lan ep d u M blic e U P xic ni o o te la d n St d at es

GINI Index (higher income inequality, higher index)
 Australia  U.S.

35 45

1000

1200

1400

1600

1800

200

400

600

800

 U.S.

 Australia

0

Annual Water Consumption per Capita, 2004
930 m3 1,739 m3

Sl ov D eni Lu enm a C xe ar ze m k c b Sl h R ou ov e rg a p U k R ubl ni te ep ic d ub Ki lic ng do Po m la Sw nd ed e Ire n Sw l itz and er G lan er d m a Fi n y nl an Au d s H tria un ga r Ko y re a N Fra et n he ce rla n Ic d s el an Tu d rk Be ey lg iu m Ja pa n Ita M ly ex N ico or w G ay re Po ece O rtu EC g D al to ta Sp l A a N us in e w tr a Ze lia al a U Ca nd ni te nad d St a at es

U ni te d
100% 120% 140% 20% 40% 60% 80% 0%

Trade-to-GDP Ratio, 2005
 U.S.  Australia

21% 13%

St at e Ja s Au pan st ra G lia re ec e Ita Fr ly an U ce ni te Sp d K a N ing in ew d Ze om al an M d ex ic Tu o r Po key rtu C gal an a N da or w a Po y la G er nd m a Ic ny el a Fi nd nl an Ko d Sw itz rea er la O Sw n d EC D ede av n er a EU De ge nm 15 av ark er ag e N Aus et he tria rla n C H ds ze ch ung R ary ep ub Sl l ov Ire ic ak la R nd ep ub Be lic lg Sl ium ov en ia

Billion AUD
100 150 200 250 50 -50 0 Imports Exports Trade Balance

AUSTRALIA Trade in Goods and Services

1, 99 0 1, 99 1 1, 99 2 1, 99 3 1, 99 4 1, 99 5 1, 99 6 1, 99 7 1, 99 8 1, 99 9 2, 00 0 2, 00 1 2, 00 2 2, 00 3 2, 00 4 2, 00 5 2, 00 6 2, 00 7

AUSTRALIA: Exports
 STM: Simply-transformed manufactures  ETM: Elaborately-transformed manufactures

AUSTRALIA: Exports

AUSTRALIA: Imports
 STM: Simply-transformed manufactures  ETM: Elaborately-transformed manufactures

AUSTRALIA: Imports

Destinations of Exports (%)

AUSTRALIA Japan (20%) China (12%) South Korea (8%) U.S. (6%) India (6%) New Zealand (6%)

U.S. Canada (22%) Mexico (13%) Japan (6%) China (5%) U.K. (4%) Germany (4%)

Origins of Imports (%)

AUSTRALIA China (14%) U.S. (14%) Japan (10%) Singapore (6%) Germany (5%)

U.S. Canada (16%) China (16%) Mexico (10%) Japan (8%) Germany (5%)

Australia: Free Trade Agreements
 Free Trade Agreements:





U.S. (AUSFTA, started in 2005) Singapore (SAFTA, started in 2003) Thailand (TAFTA, started bin 2005)

 Free Trade Agreements under

Negotiation/Consideration
        

Japan China ASEAN (Association of South-East Asian Nations)-New Zealand Chile Gulf Cooperation Council India South Korea Malaysia Indonesia

AUSTRALIA Balance of Trade and Current Account
1%

0%

-1%

-2%

19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07

% of GDP

Trade Balance -3% Current Account

-4%

-5%

-6%

-7%

AUSTRALIA Major Ag Policy Developments
 Reduction of trade-distorting support schemes for
    



producers Major reduction in support to dairy producers Implementation of drought-support measures Emphasis in policies encouraging droughtpreparedness amongst farmers More economic-oriented policies for water usage Expansion and strengthening of natural resource and environmental policies, mainly aimed at preventing soil degradation Streamlining of sanitary measures for imports

Producer Support Estimates as % of Gross Farm Receipts
Australia
70

Japan

United States

EU25

OECD Total

60

50

40

30

20

10

0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

AUSTRALIA Farm Support Schemes
 Tax arrangements and risk-management tools to  


 

manage income fluctuations Excise tax rebates on diesel used by farmers Accelerated depreciation for land and waterconservation investments Publicly funded research and development Assistance for exceptional situations (e.g., droughts and floods) Import tariffs on certain types of cheese, unprocessed tobacco, and processed fruits and vegetables

Australia Wheat Board
 Near-monopoly for Australian wheat exports


AWB currently exports 96% of Australian wheat Served as model for Canadian Wheat Board

 Created in 1939


 Government-controlled until 1999
 Privatized in 1999 (owned by active wheat

growers)  Publicly traded in Australian Stock Exchange since 2001

THE END


				
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