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."

Friday, March 23, 2012

UBS: slowing Chinese GDP growth not bad news for Australia--fascinating charts

Some excellent analysis from UBS's Matt Johnson, Andrew Lilley, and George Tharenou. Lilley is a new addition to the internal rates team, which is very highly regarded (some argue they are too heavily influenced by the novel rates views unearthed by Aussie Macro Moments ;-)). I think they are world-class, although sometimes echo a little too much market sentiment. Matt Johnson is without doubt the best publishing rates strategist in Aus/NZ.

Any amount of Chinese growth has a larger ‘growth dividend’ for Australia. This dynamic has protected Australia (so far) from the slow-down in Chinese growth (from ~12%y/y in 2007 to ~9% in 2011). It follows that a slowdown in the pace of Chinese GDP growth by even a few percentage points need not mean trouble for Australia. The other consequence of Australia’s changed trade patterns is that we now have faster growing trade partners. As the below chart shows, Australia’s trade has rotated toward the fast growing nations of Asia. As our trade flows shift toward countries that grow faster than our own, this assists, rather than hinders, the speed of our own GDP growth.