-->Economics focus

The lucky country
Mar 6th 2003
From The Economist print edition


Is Australia's economic miracle sustainable?

TO A visitor from the northern hemisphere, Australia is like another planet. Not only does the sun shine there much more at this time of year, but even as the economies of America, Europe and Japan appear to be stumbling for the second time in less than three years, Australia continues to boom. The country is now in its 12th year of uninterrupted economic expansion, having shrugged off both the East Asian crisis of 1997-98 and the global downturn in 2001. Australia's GDP grew at an annual rate of 3.0% in the year to the fourth quarter of 2002. During the past decade it has chalked up annual average growth of almost 4%, the fastest pace of any big, rich country. Not surprisingly, the OECD this week declared the Australian economy to be one of the rich world's best performers.
In part this success is down to sound monetary and fiscal policies, and to structural reforms that have both raised productivity growth and made the economy better able to adjust to shocks. Productivity growth has averaged 2.7% over the past decade, up from 1.6% in the 1980s and well ahead of America's much-acclaimed annual increase of 2.2%. The structural reforms of the past two decades have included a shift from centralised wage fixing to local enterprise bargaining, the introduction of more flexible work practices, the lowering of trade barriers, and the deregulation of product markets and the financial system. But Australia has also enjoyed some good luck. A sharp fall in its currency made producers highly competitive, and, because it has a relatively “old economy” with a small IT sector, it avoided the excesses of the tech bubble. Will its luck hold?
A severe drought cut farm output by 15% in the fourth quarter of last year, but the rest of the economy remains strong. Business investment rose by 19% last year, after several years of weakness, and surveys suggest that it should remain robust in 2003. Strong demand in East Asia, especially China, will also benefit Australia: the region accounts for almost 30% of its exports. Forecasters still expect growth to top 3% this year and next. Even though this is less than the estimated potential growth rate of 3.75%, it is still a figure that Germany or Japan can only dream of. There are, however, three big risks on the horizon that could further dent growth: a global recession, a sharp surge in the Australian dollar and a collapse in house prices.
A lengthy war with Iraq and rising oil prices would increase the risk of a sharp slowdown, if not a recession, in America and Europe. On top of this, the Australian dollar has risen by more than 20% against the American dollar since 2001. Its gain in trade-weighted terms has been more modest, and it remains the most undervalued rich-country currency, according to both The Economist's Big Mac index and more sophisticated gauges. This undervaluation, combined with Australia's outstanding economic performance, may attract large capital inflows and keep pushing the currency up, hurting exports and profits. The currency could even overshoot, and become overvalued.

Blowing the roof off
The biggest worry of all is that the house-price “bubble” could burst. Average house prices have jumped by more than one-third over the past two years, to record levels relative to incomes. Many economists argue that this is justified by lower interest rates, and they expect prices to continue rising, if more slowly. But there are clear danger signals, notably the large number of people buying houses in the expectation of big capital gains. Those buying properties to let, rather than to live in, accounted for more than 40% of all new mortgages approved last year. In the big cities a glut of rental properties has caused an increase in vacancy rates; rents have started to fall. Shane Oliver, chief economist at AMP Henderson, an investment firm, predicts that average house prices will fall by 10-15% over the next two years; but he expects the impact of this on GDP growth to be offset by strong business investment.
The real worry is not house prices, but the mortgage debts incurred by buyers. Australian household debt has jumped from 85% of personal disposable income in 1996 to an estimated 127% by the end of last year—a higher burden even than in the United States (see chart). Home-equity withdrawal (borrowing against the rising value of homes, over and above net new purchases) is running at a record 6% of disposable income. Goldman Sachs estimates that household debt service is at record levels in relation to disposable income, despite low interest rates.

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Goldman Sachs has calculated an index of “consumer vulnerability” for 28 economies. This takes account of the level and rate of growth in household debt, the trend in the household saving rate (Australia's has fallen from 4% to an estimated 1% in the past two years), unemployment and the growth in real income. Australian consumers are the most vulnerable on the list. Their excessive debts and a bursting of the housing bubble may not cause a recession by themselves, but they could certainly exacerbate a downturn caused, say, by a global recession.
Nevertheless, most Australian economists remain cheery, expecting the expansion to continue. Indeed, the mood is a bit similar to that in America in 2000, just before its bubble burst. Australians retort that their situation is completely different: America's economic imbalances were much bigger and more widespread than Australia's today. It is true that Australia has not had a stockmarket bubble, and it has also escaped overinvestment and overborrowing by firms. On the other hand, Australia, unlike America at the end of the 1990s, has a house-price bubble, which could be much more dangerous than a share-price bubble if it bursts. Then there are Australian consumers' debts. Australia's current-account deficit (4.4% of GDP last year) is also almost as big as America's.
Australia, just like America in the late 1990s, has enjoyed real productivity gains in recent years. However, there is always a risk that during a boom investors and borrowers can get carried away. Australia's housing market could be as much a victim of irrational exuberance as America's stockmarket has been.
Quelle: Economist

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>Economics focus
>The lucky country
>Mar 6th 2003
>From The Economist print edition
>
>Is Australia's economic miracle sustainable?

Ja, in etwa, das gesamte laufende Jahrzehnt betreffend. Vorraussetzung ist natuerlich, dass das Federal Government in Canberra und auch die State Governments keine gravierenden Fehler machen.

>TO A visitor from the northern hemisphere, Australia is like another planet.

Da ist was dran.

>Not only does the sun shine there much more at this time of year, but even as the economies of America, Europe and Japan appear to be stumbling for the second time in less than three years, Australia continues to boom.

Die naechsten Jahre ebenfalls, so meine ich.

>The country is now in its 12th year of uninterrupted economic expansion, having shrugged off both the East Asian crisis of 1997-98 and the global downturn in 2001.

Ich hatte nicht geglaubt, dass Aussiland die Asian crisis 1997/1998 so leicht wegsteckt, wie das dann tatsaechlich abgelaufen ist.

>Australia's GDP grew at an annual rate of 3.0% in the year to the fourth quarter of 2002. During the past decade it has chalked up annual average growth of almost 4%, the fastest pace of any big, rich country. Not surprisingly, the OECD this week declared the Australian economy to be one of the rich world's best performers.

Australien hat jetzt knapp 19 Mio Einwohner und waechst jaehrlich um ca. 1%, incl. Immigranten. Das aktuelle Durchschnittsalter liegt bei 33 Jahren, schon daran laesst sich ablesen, dass die Bevoelkerungspyramide tatsaechlich eine solche ist.

Auch laufen juengere Leute im allgemeinen leichtfuessiger als Aeltere.

>A sharp fall in its currency made producers highly competitive, and, because it has a relatively “old economy” with a small IT sector, it avoided the excesses of the tech bubble.

Es war weniger ein scharfer Fall des Aussi-Dollars sondern mehr das (spekulative) Abheben anderer Waehrungen, nebst anderen Fakten, die zum Vorteil der Exportproduzenten gerieten.

Im uebrigen, der gesamte IT-Sektor ist im Wesentlichen das Mittel zum Zweck, naemlich die klassischen Wirtschaftssektoren und die Buerokratie flexibler und effizienter zu machen.

>Will its luck hold?

Good onya, hopefully!
>
>
>Goldman Sachs has calculated an index of “consumer vulnerability” for 28 economies. This takes account of the level and rate of growth in household debt, the trend in the household saving rate (Australia's has fallen from 4% to an estimated 1% in the past two years), unemployment and the growth in real income. Australian consumers are the most vulnerable on the list. Their excessive debts and a bursting of the housing bubble may not cause a recession by themselves, but they could certainly exacerbate a downturn caused, say, by a global recession.

GS hat die Rechnung ohne den Wirt gemacht: Australia is *NOT* the US, and even not any other country on the globe. Das faengt schon beim niedrigeren Durchschnittsalter 33 an, da sind noch viele kraeftig am Zurueckbezahlen. Desweiteren wissen die Aussis niedere Zinsen sehr zu schaetzen. Eine globale Rezession wuerde die Aussis von Boom allenfalls auf niedrigere Wachstumsraten zurueckschrauben, aber keine negativen Wachstumsraten erzeugen.

Alles in allem, Australien ist nicht ueberspekuliert und uebergewichtet, eher das Gegenteil trifft zu.

>Nevertheless, most Australian economists remain cheery, expecting the expansion to continue. Indeed, the mood is a bit similar to that in America in 2000, just before its bubble burst. Australians retort that their situation is completely different: America's economic imbalances were much bigger and more widespread than Australia's today.

Absolut richtig.

>It is true that Australia has not had a stockmarket bubble, and it has also escaped overinvestment and overborrowing by firms.

The bigger the crowd of people the easier the production of bubbles of any kind. In der 19 Mio Aussi community lassen sich schon allein aus Gruenden der relativ geringen Menschenmasse keine gigantischen Blasen ueber einen langen Zeitraum wachsend erzeugen.

>On the other hand, Australia, unlike America at the end of the 1990s, has a house-price bubble,...

Weiter oben war die Bubble noch apostrophiert.

>...which could be much more dangerous than a share-price bubble if it bursts.

Geschreibsel.

>Then there are Australian consumers' debts.

Wirtschaften ohne Kredit ist unmoeglich.

>Australia's current-account deficit (4.4% of GDP last year) is also almost as big as America's.

Jede Wette, dass sich die Amis ihr Defizit kreativ schoen gerechnet haben.

>Australia, just like America in the late 1990s, has enjoyed real productivity gains in recent years.

Bullshit. Die Amis hatten papierne Produktivgewinne, die Aussis aber echte, da werden wieder Aepfel mit Birnen verglichen.

>However, there is always a risk that during a boom investors and borrowers can get carried away. Australia's housing market could be as much a victim of irrational exuberance as America's stockmarket has been.

Das haetten die Banken und die Immobilienindustrie wohl gerne so.

>Quelle: Economist

Es gibt eine viel groessere latente Gefahr fuer die Aussis, und zwar dergestalt, dass sie eines Tages von Asiaten angegriffen werden koennten.
Hoffentlich passiert das nie!

Gruss
TD

P.S. Lots of space ya here, even for dirty ol' men [img][/img]

-->Danke,@TD, für Deine Kommentierung, die sich alle potentiellen Spanien Emmigranten durchlesen sollten.
Für mich - ich bin 'Sado-Maso' und will mir das Ende hier anschauen. Aber im nächsten Leben!
Grüße
Popeye