Petri-dish economies

Everybody needs good neighbours

In the first of a series on economies that exemplify global trends, we look at Australia’s commodity boom

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Readers' comments



Having been to Australia and New Zealand recently I find the article interesting, although I agree with the person who noted how Australia's high house prices were missing as a subject, and one cannot help but think that the housing boom will end in tears. Meanwhile, yes, the economy will make hay while the sun shines, although in every gift there lies an adversity. Take New Zealand for instance, it is benefitting from increased food prices, although the extent to which that benefits the general population is suspect. A typical food basket for four in NZ will set you back at least $NZ300 which compares with a median wage of $NZ530 (thus 57% of the median wage). In the UK that typical basket will cost you around 150 Pounds Sterling which compares with a median wage of 405 Pounds Sterling (37%). I am not suggesting that people survive on the median wage in either country, obviously household income is more relevant, but the comparison is revealing.


Rather strange that the Economist named Australia's housing market the most overvalued in the world just a few weeks ago, but in this article it isn't worth a mention? The most recent (and severe) financial crisis that brought the world's greatest economy to its knees was driven by a housing bubble. It would seem obvious to me that no analysis of Australia's economy can be complete without looking at the world's most expensive housing?



Your post really made no sense whatsoever!

Why would Australia find it difficult to import oil? Surely if oil becomes that scare the world will feel it and not just Australia. And I would have to say that the Chinese boom will come to a great screaming halt if that were to happen.

I suppose it might be lucky then that Australia potentially has 31% of all the world's uranium - should oil run out, it might be the next boom!


Things sure are lookin' up & up, down under! Good for you, mates.

Now, how long this is sustainable, is a moot point, though. Still, I guess it makes a whole lotta sense to make hay while the sun shines.

Have a BLAST, limeys!!


While the article's general theme is interesting (Australia's export-driven growth), I would have liked to have seen deeper analysis on the types and quality of exports. Iron ore clearly is in demand in Asia, but who are the main buying countries, what is the growth rate, who are the main suppliers and is the mining and transport infrastructure keeping up with demand? And what about coal, gas, oil, copper, gold, silver, platinum, and uranium?

After the mining industry, another big export earner for Australia is agriculture, which in itself is an interesting case because of rising global grain prices. Surely that is more relevant than dedicating a large chunk of the article to a producer of sodium bicarbonate crystals?


Productivity in Australia has been declining since 2004. This will make make more difficult any recovery from a fall in the terms of trade.


Australians have become so carried away with the mining boom that they do not take into account the reality that mining uses a lot of energy and materials, and these non-replaceable essentials are running out. Australia's rate of oil extraction is now declining quite rapidly and they will find it increasingly difficult to import the fuel to meet demand in the face of strong competition. Converting the mining machinery, the trains and the ships to different fuels in a timely manner will not be easy. The Australian mining boom could well burst in the near future even if Chinese demand holds up.


The tragedy here is that the government yielded to an extraordarily well funded campaign against the mining tax by the big miners. The new mining tax will yield only a small fraction of the money that the original one would have - and which the miners could very easily have afforded during this extraordinary boom.

Such a tax was the logical source of funds to boost government savings, either through a fiscal surplus or a sovereign wealth fund, as the savings are being made necessary by the boom.


“Five years ago a shipload of iron ore bought 2,200 flatscreen TVs, says Glenn Stevens, governor of the Reserve Bank of Australia (RBA). Now it buys 22,000.”

Yes, flatscreen TVs have really come down in price.


Perhaps Professor McKibbin's advice was not welcome, as it was announced this week that he was not to be reappointed to the Reserve Bank Board.


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