The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Sunday, September 11, 2011

Two charts that explain why Australia's future hitched to "developing countries" not North Atlantic

Two great charts from UBS which show, as I have argued here for a while now, that Australia's growth pulse is being driven by the developing, rather than the developed, world. Some time ago I also put up a CBA chart that illustrated that 30% of global growth over the last 10 years has come outside of North America and Europe.

There is some irony here for the RBA, which I have pointed out privately. On the one hand, the RBA has been telling the media, economists and investors to stop obsessing about the "North Atlantic" economies, and to start recognising that Australia's economic destiny is hitched to the more rapidly growing developing world. Yet it is very clear that monetary policy in Australia is being determined by what happens in the old world in spite of the RBA's purported confidence that it is less relevant to the new one.

The first UBS chart below tells us that Australia's trading partners are growing more quickly than overall "World GDP", which is a recent innovation. In the past, our trading partners have actually grown at lower rates than the World average (eg, between 1995 and 2001). The second chart shows that Australian now sends 65% of its goods exports to 'developing' countries--a massive increase on past patterns--and 75% to Asia.


at 9:53 AM