Macroeconomic Management Yaw Ofosu Ayesha Tanveer Geneva Todd Course 5170
Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><...
Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><...
General Information <ul><li>Capital : Canberra  </li></ul><ul><li>Surface area : 2.9 million sq. miles </li></ul><ul><li>R...
<ul><li>Population : 22,451,006  </li></ul><ul><li>GDP per capita : $54,869;  GDP per capita PPP : $39,692 </li></ul><ul><...
Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><...
Relationship of  Government to Economy <ul><li>Free market </li></ul><ul><li>Sound and practical structure of financial re...
Political Stability <ul><li>Ranked 3 rd  in the world for political stability in the  IMD World  Competitiveness  Yearbook...
Business Operations <ul><li>Business Enterprises:  </li></ul><ul><li>Companies, Partnerships, Joint Ventures, Trusts, Sole...
Government Revenues
Estimates of General  Government Sector Expenses
Estimated Expenses by Function
Estimated Expenses by Function 9%* * Other Functions Not shown
Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><...
Economic History 2010 5% U.E. -Budget Surplus Reported 2009 Key Rate Raised by Central Bank 2008 17 Years of Growth 2006 A...
Economy <ul><li>Stable and Competitive Economy </li></ul><ul><li>Real GDP Growth = 3% change YoY in 2010  </li></ul><ul><l...
Australian Market <ul><li>14 th  largest economy (GDP) </li></ul><ul><li>4 th  largest economy in Asia-Pacific region  </l...
Technology <ul><li>Large agricultural and mineral resources used to fuel technological endeavors </li></ul><ul><li>Shifted...
Standard of Living <ul><li>2 nd  on UN Human Development Index </li></ul><ul><li>2 nd  on Quality of Life Index –  Interna...
Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><...
Monetary and Fiscal Policy <ul><li>Macroeconomic Control </li></ul><ul><li>Finance Ministry: Commonwealth Treasury of Aust...
Investments – Financial Markets <ul><li>Major Regional Financial Center </li></ul><ul><li>Vital to Global Financial System...
Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><...
Trade & Investment Relationships
Balance of Trade
Trade Agreements <ul><li>Chile  </li></ul><ul><li>New Zealand </li></ul><ul><li>Singapore </li></ul><ul><li>Thailand </li>...
Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><...
Economic Indicators (US $) 2006 2007 2008 2009 2010(a) 2011(b) GDP   (billions) (current prices) 784.8 953.9 1,056.8 993.2...
GDP Growth Rate
Inflation Rate
Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><...
Comparison – General Information, Demographics, Standard of Living Australia Canada New Zealand <ul><li>Area: 2.9 million ...
Comparison –  Economic Performance (2010)
Summary 2 <ul><li>Strong performer over past decade </li></ul><ul><li>What makes Australia’s economy strong?  </li></ul><u...
The Future 2 <ul><li>Australia needs to adapt to meet coming challenges while grasping future opportunities </li></ul><ul>...
Questions?
References <ul><li>ASX Group. (2011). The Australian Market. Retrieved January 6, 2011 from  http://www.asxgroup.com.au/th...
References <ul><li>Australian Government, Department of Foreign Affairs and Trade, Australia in Brief. (2008, June). Tradi...
References <ul><li>Guide to Australia. (2010, June 26). Retrieved December 1, 2010, from  http://www.executiveplanet.com/i...
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Macroeconomic Management

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  • Ayesha Agenda
  • Ayesha General Information and Demographics
  • Ayesha Surrounded, by the Indian and Pacific Oceans, Australia is the 6 th largest country by total area. Australia is the world’s smallest continent, but is also the world’s largest island. Australia became an independent nation on January 1, 1901. The British Parliament passed legislation allowing the six Australian colonies to govern in their own right as part of the Commonwealth of Australia. The Commonwealth of Australia was established as a Constitutional Monarchy. ‘Constitutional’ because the Commonwealth Government was established with a written constitution, and ‘Monarchy’ because Australia&apos;s Head of State was Queen Victoria. PPP (Purchasing Power Parity): An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency&apos;s purchasing power. PPP is calculated as: S = P¹ / P² Where: &amp;quot;S&amp;quot; represents exchange rate of currency 1 to currency 2  &amp;quot;P1&amp;quot; represents the cost of good &amp;quot;x&amp;quot; in currency 1 &amp;quot;P2&amp;quot; represents the cost of good &amp;quot;x&amp;quot; in currency 2 In other words, the exchange rate adjusts so that an identical good in two different countries has the same price when expressed in the same currency.  For example, a chocolate bar that sells for C$1.50 in a Canadian city should cost US$1.00 in a U.S. city when the exchange rate between Canada and the U.S. is 1.50 USD/CDN. (Both chocolate bars cost US$1.00.)
  • Ayesha Most of the continent is desert or semi-desert and has limited agricultural value. Consequently, Australia is one of the world&apos;s most urbanized countries, with 89% of its population living in large cities. Australia’s population of 22.5 million makes it the 51 st most populous country on Earth. GDP per capita : $54,869 It has a low unemployment rate and a high literacy rate. At 81 years of age, the average life expectancy in Australia is among the highest in the world. Average median age is around 37.5 years Approximately 26% of the people living in Australia are immigrants. Australia is home to citizens from some 200 countries, and with over 4 million citizens who speak a second language. has the most multilingual workforce in the Asia–Pacific region. Potential workforce: The potential workforce is the number of people in the population of workforce age, which is conventionally defined as 15-64 years old. The actual workforce will depend on the proportion of people aged between 15-64 years that seek to actively participate in the workforce and those 65 and over who continue to work. PPP (Purchasing Power Parity): An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency&apos;s purchasing power.
  • Geneva Government Economic management style, degree of government control and how it is asserted such as public ownership of businesses, subsidies, tax policies and monetary policy Effectiveness of Australia’s attempts to manage its economy History of government actions that have applied to the economy over the past 5 years. Significant economic data: governmental expenditures and revenues
  • Geneva Government Australia is a Free market economic system. The 4 main components of the Australian economic system are trade, manufacturing, services and finance. • Australia has Sound and practical structure of financial regulations and institutions. • Low barriers to trade and investment open to investment without unnecessary delay.. • A new business can be established in Australia within two days compared with an OECD average of 20 days. • The goods and services tax (GST) – Australia’s value‐added tax – is charged at 10% and applies to almost all goods and services transactions across the economy. • There is a flat corporate tax rate of 30%.
  • Geneva Having a stable political framework makes Australia a safe place for investment. According to IMD World Competitiveness Yearbook of 2010, Australia ranks 3 rd in the world for political stability. This is within a range of 0 being very high and 10 very low. Notice that, by comparison, Canada is ranked No. 8 and New Zealand is No. 12.
  • Geneva The common forms of business enterprise in Australia are: Partnerships Joint ventures, Trusts, Companies, Sole traders A company is considered to be resident for taxation purposes: If It is incorporated in Australia, or if it carries on business there and both central mgmt and control are located there. or its voting power is controlled by shareholders who are Australian residents. Taxable Australian assets generally include: Assets used by the non-resident to carry on business in Australia . Real estate located in the country. Interests in resident partnerships, trusts, or private companies. Shareholdings of more than 10% in resident public companies.
  • Geneva In regard to Government Revenues, the key points of interest reported in this revenue statement include: Total Revenue $322 Billion, which is 23% of GDP.
  • Geneva In reference to Estimates of General Government Sector Expenses, Total Expenses were $355 Billion, which is 25% of GDP. General Government Sector Expenses are expected to increase slowly in real terms in 2010‑11 and across the forward years.
  • Geneva This table provides a line item depiction of Budgeted government sector expenses by function for periods 2009‑10 to 2013‑14. For ease of review, this same data is depicted in pie chart form. Mid‑Year Economic and Fiscal Outlook 2009‑10 (MYEFO)
  • Geneva % of Government Budget by Function The largest portion of Australia’s budget goes to Social Security &amp; Welfare at 32%. Other Purposes - Includes expenses incurred in servicing public debt interest, assistance to State, Territory and local governments, natural disaster relief, the contingency reserve, and expenses related to interest on public service and military benefits. The noteworthy expenditures include Health at 16%, Education 9% and Defense only 6%. Additionally, 9% of the budget is allocated to Fuel and Energy, Housing &amp; Community Amenities, Transport &amp; Communication, Public Order &amp; Safety, Agriculture, Forestry &amp; Fishing, Recreation and Culture, Mining, Manufacturing &amp; Construction.
  • Yaw Economy
  • Yaw The growth of the Australian economy began in the middle of the 19th century with the wool industry and the gold rush. The gold rush was also responsible for the first significant population growth of the country. The second phase of economic boom began during the World War II and continued until 1970. At the beginning of the new millennium, a new improved tax system was started which was favorable to both individuals and businesses. In the beginning of the 21 st century the Australian government further reformed its economy. In October 2009, the Central Bank raised its key rate, making Australia the first G20 country to constrict its monetary policy. The unemployment rate in this country speaks for its developing economy as 11% unemployment rate in 1992 has come down to just 5%.
  • Yaw Australia, is marked by a Stable/Competitive Economy. In June 2008, Australia recorded 17 consecutive years of economic growth since 1992 – averaging 3.3% a year. This places Australia in the top echelon of developed countries in terms of sustained rates of growth. Relatively unaffected by global recession, Australia ranks 1 st in the Asia‐Pacific region for labor, agricultural and industrial productivity per person employed, according to the IMD World Competitiveness Yearbook. Strong Economic Management : Australia’s positive outlook is also sustained by its strong fiscal position. Net Government debt was eliminated in 2005‐06 making Australia a net creditor nation. In 2010, the Australian Government reported a budget surplus equivalent to 3.5% of GDP – approximately $41.6 billion (2010 GDP = $1.2 Trillion). Exports are strong.
  • Yaw With a relatively high-growth and low-inflation economy supported by robust political and economic institutions, and an internationally competitive business sector, Australia now ranks as the 14th largest economy in the world (by GDP), and the 4th largest in the Asia Pacific region. Australia has become an attractive investment destination for global investors as well as home to many major multinational financial services providers. With a diverse investor group comprised of 40% foreign investors, 40% domestic institutional investors and 20% retail investors, the Australian equity market is well placed in the global economy.
  • Yaw In the 20 th Century, it could be strongly argued that Australia’s economic success was based on its abundant agricultural and later mineral and fuels resources. While these sectors are still important, Australia has increasingly become a knowledge-based economy. Numerous factors have contributed to this development: the pace of technological and social change; advances in transport making travel, and the exchange of ideas, easier; and broader access to higher standards of education. Information and communications technology (ICT) is a key driver of economic growth, and continuing expansion of ICT infrastructure is essential to keep pace with world standards. Australia’s ICT market is worth an estimated $89 billion with 25,000 companies employing 236,000 IT specialists. Australia is ranked the 9 th among the world’s most e-ready Digital Economies in a joint report conducted by IBM and The Economist.
  • Yaw The standard of living of Australia has risen significantly in the last fifteen years, and this country is among the top 5 developed countries of the world. A 2006 survey noted that living standards in Australia surpass those of all Group of Eight countries except the United States. Note : The G20 replaced the G8 on September 25, 2009. Australia has one of the highest percentages of shareholders in the world More than 50% of the adult population own shares in publicly‐listed companies This has led the Aussies to be considered more investor savvy than most other nations. Aussies have the ability to buy and invest with confidence. PPP = Purchasing Power Parity (per capita)
  • Yaw Strong Economic Management : Australia’s positive outlook is also sustained by its strong fiscal position. Australia’s independent central bank, the Reserve Bank of Australia (RBA), is responsible for monetary policy, in particular to keep consumer price inflation between two and three%, on average, over business cycles. The Macroeconomic objectives of the Australian Government are: full employment, price stability, external balance and economic growth. To fulfill these objectives the government use 2 main policies: 1. Fiscal policy which deals with the commonwealth&apos;s plans and actions to influence economic activity though taxation and Government spending. 2. Monetary policy. Its purpose is to increase or decrease aggregate demand (AD) depending on the economic activity and to manage inflation.
  • Yaw Financial markets : • Australia is a major regional financial center and a vital cog in the global financial system. • The Australian Stock Exchange and the Sydney Futures Exchange merged in 2006 to form, the Australian Securities Exchange (ASX), the world’s 8 th largest exchange. • As of October 2010, the ASX had 2,192 listed companies with a domestic market capitalization of $1.4 trillion. 150,000 equities and 400,000 futures and options are traded daily. • Australia’s trading day spans the closure of the markets in the United States and the opening of markets in Europe. • The ASX also has strong links with the major stock markets of Asia. Notable: The ASX, is set to lose its monopoly on operating a stock market in Australia in 2011, and an affiliate of Chi-X Europe is planning to set up a trading system once the monopoly is abolished. Singapore, meanwhile, has long lagged behind Hong Kong and Tokyo as a regional financial center, and made an $8.3 billion purchase offer to the ASX in October 2010.
  • Yaw Trade Practices
  • Yaw Overall detailed view of trade metrics of Australia: 42% of Australia’s trade is with China and Japan. 38% of goods imported to Australia are from China, the U.S. and Japan.
  • Yaw The Australian Government supports the negotiation of comprehensive Free Trade Agreements (FTAs) that are consistent with the World Trade Organization rules and guidelines and which complement and reinforce the multilateral trading system.
  • Yaw Australia Balance of Trade: Australia reported a trade surplus equivalent to A$2.6 Billion in October of 2010. Rich in natural resources, Australia is a major exporter of agricultural products, particularly wheat and wool, minerals such as iron-ore and gold, and energy in the form of liquefied natural gas and coal. Australia is a major importer of machinery and transport equipment, computers and office machines and telecommunication lasers. Its main trading partners are: Japan, China, The United States and New Zealand.
  • Ayesha Economic Indicators Significant economic data: balance of payments, inflation rate, interest rates, average per capita income, governmental expenditures and revenues, major and burgeoning industries, major imports/exports, etc.
  • Ayesha Interesting economic activity that occurred during that period of time due to recession. Relative to other countries Australia has been performing really well. (a) All recent data subject to revision; (b) IMF forecast; [c] PPP is purchasing power parity; (d) Total may not add due to rounding; (e) Merchandize trade; (f) Excludes imports of aircraft after September 2008. np Data not published. .. Data not meaningful. PPP (Purchasing Power Parity): An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency&apos;s purchasing power. PPP is calculated as: S = P¹ / P² Where: &amp;quot;S&amp;quot; represents exchange rate of currency 1 to currency 2  &amp;quot;P1&amp;quot; represents the cost of good &amp;quot;x&amp;quot; in currency 1 &amp;quot;P2&amp;quot; represents the cost of good &amp;quot;x&amp;quot; in currency 2 In other words, the exchange rate adjusts so that an identical good in two different countries has the same price when expressed in the same currency.  For example, a chocolate bar that sells for C$1.50 in a Canadian city should cost US$1.00 in a U.S. city when the exchange rate between Canada and the U.S. is 1.50 USD/CDN. (Both chocolate bars cost US$1.00.)
  • Ayesha Australia GDP Annual Growth Rate: Australia’s economy expanded 2.7 in the third quarter of 2010, as measured by the year-over-year change in Gross Domestic Product (GDP YoY). Unlike the commonly used quarterly GDP growth rate the annual GDP growth rate takes into account a full year of economic activity, thus avoiding the need to make any type of seasonal adjustment. Australia’s Gross Domestic Product is worth 1.2 trillion dollars. From 1960 until 2010, Australia&apos;s average annual GDP Growth was 3.4% reaching an historical high of 9.00% in 1964 and a record low of -3.40% in 1983.
  • Ayesha Australia Inflation Rate: The inflation rate in Australia was last reported at 3.10% in June of 2010. From 1937 until 2010, the average inflation rate in Australia was 6.02% reaching an historical high of 17.60% in March of 1975 and a record low of -0.30% in September of 1997. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. Canada Inflation Rate: The inflation rate in Canada was last reported at 2% in November of 2010. From 1915 until 2010, the average inflation rate in Canada was 3.26% reaching an historical high of 21.60% in June of 1920 and a record low of -17.80% in June of 1921. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. New Zealand Inflation Rate: The inflation rate in New Zealand was last reported at 1.50% in the third quarter of 2010. From 1915 until 2010, the average inflation rate in New Zealand was 4.67% reaching an historical high of 44.00% in September of 1918 and a record low of -100.00% in June of 1915. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy.
  • Geneva Comparison: Canada &amp; New Zealand Next we will see how Australia performed in comparison to Canada and New Zealand.
  • Geneva W ith respect to comparing Australia to Canada and New Zealand , the following demographic statistics were highlighted: Population , Median Age , Birth Rate , Death Rate and Life Expectancy . Population - Australia: 22 million; Canada, 24 million; New Zealand: 4.3 million Median Age: Australians: 38 years; Canadians: 36; New Zealanders: 41 Birth Rate - Australia: 12 per 1000; Canada: 10 per 1000; New Zealand: 14 per 1000 Death Rate - Australia: 8 per 1000; Canada: 7 per 1000; New Zealand: 7 per 1000 Life Expectancy - Australia: 82 years; Canada: 81 years; New Zealand: 80 years
  • Geneva Geneva Australia’s economy expanded 1.2% in 2010, while Canada and New Zealand contracted. Australia’s inflation rate was lightly higher than that of Canada or Newland in 2010. As far as the jobless rate, Australia&apos;s was 5.2%., lower than either Canada or New Zealand Over Australia has a stronger economy than either Canada or New Zealand and it is ranked third for political stability and 4 among Asian Pacific nations for strong economy. GDP Growth Rate -2010: Australia’s economy expanded 1.2% in 2010, while Canada and New Zealand contracted. Canada’s economy contracted 2.5% in 2010. New Zealand’s economy contracted - 1.7% in 2010. I Inflation Rate in 2010: Australia’s inflation rate is slightly higher than that of Canada or Newland Australia’s was last reported at 3.10% in June of 2010. Canada’s was last reported at 2% in November of 2010. New Zealand’s was last reported at 1.50% in the third quarter of 2010. Joblessness in 2010: Australia&apos;s was 5.2%., lower than either Canada or New Zealand. So over all Australia has the strongest economy of the two.
  • All Some of the key contributing factors to Australia’s strong economic performance were demand for commodities, growing ties with China, low inflation, a housing market boom and strong emphasis on reforms. High export prices for agricultural products, energy and raw materials provide steady and growing foreign exchange income, leading to increasing business and consumer confidence gave a boost to the national economy. The mining sector in particular notched up huge growth numbers. During mid-2008, growth was constrained due to a tight labor market and infrastructure bottlenecks. The trade deficit went up because of strong import demand, a drought and a strong currency. However, the country managed to somewhat escape the Great Recession, which many other developed economies could not. The country’s strong banking sector, monetary and fiscal stimulus, investment from China and sharp buoyant export demand acted as protective factors.  Some of the major plans for 2010 economic development include raising economic productivity, passing emissions trading legislation and furthering economic relations with China. The Government also plans to focus assistance for drought, devastating bush-fires and natural disaster related issues. Despite high global demand for Australian mineral commodities, export growth has remained flat in comparison to strong import growth. Even though Australia enjoys high commodity prices, economists have warned that structural change is needed in order to increase the size of manufacturing sector.
  • Macroeconomic Management

    1. 1. Macroeconomic Management Yaw Ofosu Ayesha Tanveer Geneva Todd Course 5170
    2. 2. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
    3. 3. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
    4. 4. General Information <ul><li>Capital : Canberra </li></ul><ul><li>Surface area : 2.9 million sq. miles </li></ul><ul><li>Resources : Coal, Iron Ore, Gold, Petroleum, Natural Gas </li></ul><ul><li>Official language : English </li></ul><ul><li>GDP : ≈$1.2 trillion; GDP PPP : $882.3 billion </li></ul><ul><li>Monetary Unit/Currency : Australian Dollar = A$ </li></ul><ul><li>Exchange rate : A$1 = US$0.9947 (Jan 12, 2010) </li></ul><ul><li>Head of State : Queen Elizabeth II, represented by Governor-General Ms. Quentin Bryce </li></ul><ul><li>Head of Government : Prime Minister Ms. Julia Gillard </li></ul>
    5. 5. <ul><li>Population : 22,451,006 </li></ul><ul><li>GDP per capita : $54,869; GDP per capita PPP : $39,692 </li></ul><ul><li>Unemployment Rate : 5.2% </li></ul><ul><li>Literacy Rate : 99% </li></ul><ul><li>Multilingual : 4 million Aussies speak a two languages </li></ul><ul><li>Life Expectancy : Females 83.7 years, Males 79.2 years </li></ul><ul><li>Median Age : Females 38.1 years, Males 37.3 years </li></ul><ul><li>Potential Workforce : 67.5% of population and growing 200,000+ annually </li></ul>Demographics
    6. 6. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
    7. 7. Relationship of Government to Economy <ul><li>Free market </li></ul><ul><li>Sound and practical structure of financial regulations and institutions </li></ul><ul><li>Open to investment without unnecessary delay </li></ul><ul><li>Strong, transparent corporate governance </li></ul><ul><li>Business-oriented corporate regulation and insolvency procedures </li></ul><ul><li>Low barriers to trade and investment </li></ul><ul><li>Flat corporate tax rate of 30% </li></ul>
    8. 8. Political Stability <ul><li>Ranked 3 rd in the world for political stability in the  IMD World Competitiveness Yearbook 2010 </li></ul><ul><li>Risk of Political Instability </li></ul><ul><ul><li>0 = Very High </li></ul></ul><ul><ul><li>10 = Very Low </li></ul></ul>The risk of political instability is very High Low Ranking Country Rating (2010) 1 1 NORWAY 9.36 2 LUXEMBOURG 9.25 3 AUSTRALIA 9.24 4 FINLAND 9.20 5 DENMARK 9.11 6 AUSTRIA 9.00 7 SWITZERLAND 8.93 8 CANADA 8.90 9 CHILE 8.86 10 SINGAPORE 8.78 11 SWEDEN 8.77 12 NEW ZEALAND 8.76 13 QATAR 8.68 14 GERMANY 8.49 15 FRANCE 8.46 16 USA 8.16
    9. 9. Business Operations <ul><li>Business Enterprises: </li></ul><ul><li>Companies, Partnerships, Joint Ventures, Trusts, Sole Traders </li></ul><ul><li>Corporate Taxation </li></ul><ul><li>Incorporated in Australia </li></ul><ul><li>Carries business there </li></ul><ul><li>Australian voting power </li></ul><ul><li>Taxable Assets </li></ul><ul><li>Assets used by non-residents </li></ul><ul><li>Real estate in country </li></ul><ul><li>Interest </li></ul><ul><li>Shareholding greater than 10% in public companies </li></ul>
    10. 10. Government Revenues
    11. 11. Estimates of General Government Sector Expenses
    12. 12. Estimated Expenses by Function
    13. 13. Estimated Expenses by Function 9%* * Other Functions Not shown
    14. 14. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
    15. 15. Economic History 2010 5% U.E. -Budget Surplus Reported 2009 Key Rate Raised by Central Bank 2008 17 Years of Growth 2006 ASX Formed 2005 Net Gov’t Debt Eliminated 1990s 11% U.E. - Economic Reforms Instituted 1960 3.37% Ave. annual GDP growth begins 1800s Gold Rush
    16. 16. Economy <ul><li>Stable and Competitive Economy </li></ul><ul><li>Real GDP Growth = 3% change YoY in 2010 </li></ul><ul><li>1 st in Asian-Pacific Labor, Agriculture and Industrial Productivity </li></ul><ul><li>Total Economy: Resources sector (7.5%), Financial services (10.8%), Manufacturing (9.3%), Construction (7.8%) </li></ul><ul><li>Strong Economic Management </li></ul><ul><li>2010 budget surplus: 3.5% of GDP ($41.6 billion) </li></ul><ul><li>Goods & Services Exports: 20.3% of GDP </li></ul>
    17. 17. Australian Market <ul><li>14 th largest economy (GDP) </li></ul><ul><li>4 th largest economy in Asia-Pacific region </li></ul><ul><li>Largest trading partners: China, Japan and U.S. </li></ul><ul><li>Real GDP growth averaged 3.0% annually (2000 - 2010) </li></ul><ul><li>One of the largest global suppliers of raw materials (coal, iron ore, etc) </li></ul><ul><li>7 th largest Foreign exchange market in the world </li></ul><ul><li>Australian dollar is 5 th most traded currency </li></ul><ul><li>Funds management: 4 th largest pool of funds under management in the world </li></ul>
    18. 18. Technology <ul><li>Large agricultural and mineral resources used to fuel technological endeavors </li></ul><ul><li>Shifted to knowledge based economy due to vast improvements in I nformation and C ommunication T echnology ( ICT ). </li></ul><ul><li>9 th most developed ICT infrastructure </li></ul>
    19. 19. Standard of Living <ul><li>2 nd on UN Human Development Index </li></ul><ul><li>2 nd on Quality of Life Index – International Living magazine </li></ul><ul><li>4 th on Legatum Institute Prosperity Index </li></ul><ul><li>4 Cities on World's Most Livable Cities Top 10 list: Melbourne, Sydney, Perth, and Adelaide - The Economist magazine </li></ul><ul><li>2 nd highest Living Standard among G20 countries </li></ul><ul><li>50% of Aussies own stock </li></ul>
    20. 20. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
    21. 21. Monetary and Fiscal Policy <ul><li>Macroeconomic Control </li></ul><ul><li>Finance Ministry: Commonwealth Treasury of Australia </li></ul><ul><li>Central Bank: Reserve Bank of Australia ( RBA ) </li></ul><ul><li>Macroeconomic Objectives: </li></ul><ul><ul><li>Full employment; </li></ul></ul><ul><ul><li>Price stability; </li></ul></ul><ul><ul><li>External balance; and </li></ul></ul><ul><ul><li>Economic growth </li></ul></ul><ul><li>Main Policies: </li></ul><ul><ul><li>Fiscal Policy: Taxation and Government spending </li></ul></ul><ul><ul><li>Monetary Policy: Increase/Decrease Aggregate Demand (AD) and manage inflation </li></ul></ul>
    22. 22. Investments – Financial Markets <ul><li>Major Regional Financial Center </li></ul><ul><li>Vital to Global Financial System </li></ul><ul><li>Australian Stock Exchange ( ASX ): World’s 8 th largest </li></ul><ul><li>2,192 companies listed (October 30, 2010) </li></ul><ul><li>$1.4 trillion in Market Capitalization (October 30, 2010) </li></ul><ul><li>Attractive for merger/acquisition </li></ul>
    23. 23. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
    24. 24. Trade & Investment Relationships
    25. 25. Balance of Trade
    26. 26. Trade Agreements <ul><li>Chile </li></ul><ul><li>New Zealand </li></ul><ul><li>Singapore </li></ul><ul><li>Thailand </li></ul><ul><li>United States </li></ul><ul><li>China (Negotiations) </li></ul><ul><li>India (Feasibility Study) </li></ul><ul><li>Indonesia (Feasibility Study) </li></ul><ul><li>Japan (Negotiations) </li></ul><ul><li>Korea (Negotiations) </li></ul><ul><li>Malaysia (Negotiations) </li></ul>Australia's Free Trade Agreements (FTAs) FTAs under Negotiation or Consideration
    27. 27. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
    28. 28. Economic Indicators (US $) 2006 2007 2008 2009 2010(a) 2011(b) GDP (billions) (current prices) 784.8 953.9 1,056.8 993.2 1,219.7 1,297.8 GDP PPP (billions) 737.0 795.2 830.8 848.9 882.3 924.8 GDP per capita 37,599 44,860 48,630 44,808 54,869 57,662 GDP per capita PPP 35,308 37,398 38,246 38,663 39,692 41,089 Real GDP Growth (% change YoY) 2.4 5.0 2.1 1.2 3.0 3.5 Current Account Balance (millions) -41,457 -58,920 -47,753 -43,781 -29,828 -29,418 Current Account Balance (% GDP) -5.3 -6.2 -4.5 -4.4 -2.4 -2.3 Goods & Services Exports (% GDP) 20.1 19.1 22.4 19.9 22.0 21.5 Inflation (% change YoY) 3.3 3.0 3.7 2.1 3.0 3.0
    29. 29. GDP Growth Rate
    30. 30. Inflation Rate
    31. 31. Agenda <ul><li>General Information and Demographics </li></ul><ul><li>Government </li></ul><ul><li>Economy </li></ul><ul><li>Monetary and Fiscal Policy </li></ul><ul><li>Trade Practices </li></ul><ul><li>Economic Indicators </li></ul><ul><li>Comparison: Canada & New Zealand </li></ul>
    32. 32. Comparison – General Information, Demographics, Standard of Living Australia Canada New Zealand <ul><li>Area: 2.9 million sq. miles </li></ul><ul><li>Area: 3.5 million sq. miles </li></ul><ul><li>Area: 103,737 sq. miles </li></ul><ul><li>4 th - Prosperity Index </li></ul><ul><li>5 th - Prosperity Index </li></ul><ul><li>7 th - Prosperity Index </li></ul><ul><li>2 nd - Quality of Life Index </li></ul><ul><li>5 th - Quality of Life Index </li></ul><ul><li>9 th - Quality of Life Index </li></ul><ul><li>4 th - UN Human Development Index </li></ul><ul><li>3 rd - UN Human Development Index </li></ul><ul><li>8 th - UN Human Development Index </li></ul><ul><li>4 of world’s Top 10 cities </li></ul><ul><li>3 of world’s Top 10 cities </li></ul><ul><li>1 of world’s Top 10 cities </li></ul><ul><li>Median Age: 37.5 years </li></ul><ul><li>Median Age: 36.8 years </li></ul><ul><li>Median Age: 40.7 years </li></ul><ul><li>Death Rate: 6.81/1,000 </li></ul><ul><li>Death Rate: 7.87/1,000 </li></ul><ul><li>Death Rate: 7.1/1,000 </li></ul><ul><li>Birth Rate: 12.39/1,000 </li></ul><ul><li>Birth Rate: 10.28/1,000 </li></ul><ul><li>Birth Rate: 13.81/1,000 </li></ul><ul><li>Life Expectancy: 81.72 years </li></ul><ul><li>Life Expectancy: 81.29 years </li></ul><ul><li>Life Expectancy: 80.48 years </li></ul><ul><li>Population: 21,515,754 </li></ul><ul><li>Population: 33,759,742 </li></ul><ul><li>Population: 4,252,277 </li></ul>
    33. 33. Comparison – Economic Performance (2010)
    34. 34. Summary 2 <ul><li>Strong performer over past decade </li></ul><ul><li>What makes Australia’s economy strong? </li></ul><ul><li>Demand for commodities; </li></ul><ul><li>Growing ties with China & Leadership in Asia-Pacific Region; </li></ul><ul><li>Low inflation; </li></ul><ul><li>Housing market boom; and </li></ul><ul><li>Strong export demand </li></ul><ul><li>Safe, Stable and Prosperous </li></ul><ul><li>Attractive hub for global & regional business operations </li></ul>
    35. 35. The Future 2 <ul><li>Australia needs to adapt to meet coming challenges while grasping future opportunities </li></ul><ul><li>Flexibility of both labor and capital will be critical to future success </li></ul><ul><li>… as will infrastructure, where under-investment has contributed to capacity constraints </li></ul><ul><li>Needs to successfully navigate the uncertain global economic environment </li></ul>Demographic Transition Climate Change Evolution of Global Economic Landscape <ul><li>Trend in annual total rainfall, </li></ul><ul><li>1970-2007 (mm/10yrs) </li></ul>
    36. 36. Questions?
    37. 37. References <ul><li>ASX Group. (2011). The Australian Market. Retrieved January 6, 2011 from http://www.asxgroup.com.au/the-australian-market.htm </li></ul><ul><li>Australia Development Bank (2010). Fact Sheet. Retrieved December 21, 2010 from http://www.adb.org/documents/fact_sheets/aus.pdf </li></ul><ul><li>Australia Development Bank (2010). Pacific Economic monitor. Retrieved December 21, 2010 from http://www.adb.org/Documents/Reports/PacMonitor/pem-dec10.pdf </li></ul><ul><li>Australia. (2010, September). Retrieved December 2, 2010, from http://en.wikipedia.org/wiki/Australia </li></ul><ul><li>Australia. (2008). Retrieved December 1, 2010, from http://www.cyborlink.com/besite/australia.html </li></ul><ul><li>Australia Economy. (2010). Retrieved December 10, 2010, from http://www.economywatch.com/world_economy/australia/ </li></ul><ul><li>Australian Government, Australian Trade Commission. (2010). Retrieved January 4, 2010, from http://www.austrade.gov.au/ </li></ul><ul><li>Australian Government. (2010). Budget 2010-2011. Retrieved January 5, 2011, from http://www.aph.gov.au/budget/2010-11/index.htm </li></ul><ul><li>Australian Government. (2010). Financial Regulation. Retrieved December 24, 2010, from http://australia.gov.au/search?meta_C_phrase_sand=topics&advancedSearch=false&form=simple&collection=gov_combined&coverage=info&query=financial </li></ul><ul><li>Australian Government. (2010). Law and Justice. Retrieved December 24, 2010, from http://australia.gov.au/topics/law-and-justice </li></ul><ul><li>Australian Government, Department of Foreign Affairs and Trade. (2008, March). Retrieved January 2, 2011, from http://www.dfat.gov.au/facts/people_culture.html </li></ul><ul><li>Australian Government, Department of Foreign Affairs and Trade, Australia in Brief. (2008, June). A stable and competitive economy. Retrieved December 24, 2010, from http://www.dfat.gov.au/aib/competitive_economy.html </li></ul><ul><li>Australian Government, Department of Foreign Affairs and Trade. (2010). Economic Fact Sheets. Retrieved December 24, 2010, from http://www.dfat.gov.au/geo/fs/aust.pdf </li></ul><ul><li>Australian Government, Department of Foreign Affairs and Trade, Australia in Brief. (2008, June). Legal System. Retrieved November 30, 2010, from http://www.dfat.gov.au/facts/legal_system.html </li></ul>
    38. 38. References <ul><li>Australian Government, Department of Foreign Affairs and Trade, Australia in Brief. (2008, June). Trading with the world. Retrieved December 24, 2010, from http://www.dfat.gov.au/aib/trade_investment.html </li></ul><ul><li>Australian Government, Department of Immigration and Citizenship. (2010). Retrieved December 2, 2010, from http://www.immi.gov.au/living-in-australia/choose-australia/about-australia/au-customs/ </li></ul><ul><li>Australian Government. (2010). Financial Regulation. Retrieved January 4, 2011, from http://australia.gov.au/search?meta_C_phrase_sand=topics&advancedSearch=false&form=simple&collection=gov_combined&coverage=info&query=financial </li></ul><ul><li>Australian Government (2008). Study on Intraregional Trade and Investment in South Asia. Retrieved December 21, 2010 from http://www.adb.org/Documents/Books/Intraregional-Trade-Investment/trade-investment.pdf </li></ul><ul><li>Australian Government, The Treasury. (2010). Retrieved December 1, 2010 from http://www.treasury.gov.au/home.asp?ContentID=521 </li></ul><ul><li>Commonwealth Treasury of Australia http://www.treasury.gov.au/home.asp?ContentID=521 </li></ul><ul><li>Digital Inspiration. (2009, June 3). Countries that are least affected by recession. Retrieved November 28, 2010, from http://www.labnol.org/internet/countries-least-affected-by-economic-recession/8814/ </li></ul><ul><li>Doing Business in Australia. (2010). Retrieved December 1, 2010, from http://www.worldbiz.com/australia.html </li></ul><ul><li>Doing Business in Australia: A Short Form – Business Profile. (2010). ASA Consultants. Retrieved November 28, 2010, from http://www.australia-migration.com/page/Business_in_Australia/131 </li></ul><ul><li>Economist Intelligence Report. (2010). Digital economy rankings 2010: Beyond e-readiness. Retrieved January 11, 2011, from http://www.eiu.com/site_info.asp?info_name=The_Global_Liveability_Report&page=noads&rf=0 </li></ul><ul><li>Economist Intelligence Report. (August 2010). Global Livability Report. Retrieved January 7, 2011, from http://www.eiu.com/site_info.asp?info_name=digitaleconomy_2010&page=noads&rf=0 </li></ul><ul><li>Economic System of Australia. (2007). Retrieved January 13, 2010, from http://www.australiaonnet.com/economy-business/economic-system.html </li></ul>
    39. 39. References <ul><li>Guide to Australia. (2010, June 26). Retrieved December 1, 2010, from http://www.executiveplanet.com/index.php?title=Australia </li></ul><ul><li>Human Development Index (HDI) - 2010 Rankings. (2010). Retrieved January 7, 2011, from http://hdr.undp.org/en/statistics/ </li></ul><ul><li>IMD World Competitiveness Yearbook, Switzerland. (2010). Retrieved December 11, 2010, from www.imd.ch/wcy </li></ul><ul><li>IMF articles (2010). Retrieved December 11, 2010, from http://www.imf.org/external/country/aus/index.htm </li></ul><ul><li>IMF Data Mapper (2010). Retrieved December 11, 2010, from http://www.imf.org/external/datamapper/index.php </li></ul><ul><li>IMF: Financial Position in the Fund as of November 30, 2010 (2010). Retrieved October 11, 2010, from http://www.imf.org/external/country/aus/index.htm </li></ul><ul><li>Index Mundi. (2010). Real GDP growth. Retrieved January 16, 2010, from http://www.indexmundi.com/australia/gdp_real_growth_rate.html </li></ul><ul><li>International Living. (2010). 2010 Quality of Life Index: 194 Countries Ranked and Rated to Reveal the Best Places to Live http://internationalliving.com/2010/02/quality-of-life-2010/ </li></ul><ul><li>Reserve Bank of Australia (2010). Retrieved December 11, 2010, from http://www.rba.gov.au/ </li></ul><ul><li>Swire, M. (2010). Doing Business in Australia. Retrieved December 28, 2010, from http://www.lowtax.net/lowtax/html/offon/australia/aus_business.html </li></ul><ul><li>The 2010 Legatum Prosperity Index. (2010). Legatum Institute, United Kingdom. </li></ul><ul><li>Trading Economics: Website for economic indicator by countries. (2010). Retrieved December 29, 2010 from  http://www.tradingeconomics.com/Economics/Inflation-CPI.aspx?Symbol=AUD </li></ul><ul><li>Wikipedia. (2010). Australian Securities Exchange. Retrieved January 6, 2011, from http://en.wikipedia.org/wiki/Australian_Stock_Exchange </li></ul><ul><li>Wikipedia. (2010). G8. Retrieved November 28, 2010, from http://en.wikipedia.org/wiki/G8 </li></ul>

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