Australia has prospered through two decades of economic outperformance, with the level of growth almost twice that of its peers. Much of the platform for growth was laid during the 1980’s when policy frameworks provided efficient and flexible market mechanisms (namely, the floating foreign exchange rate, deregulation of the banking system and productivity reforms in the labour market). Over the last decade or so the main drivers have been episodic, but strong, credit growth and the unprecedented mining boom driven by China’s rapid industrialisation.  

The unravelling of the mining boom has led to Australia consistently posting negative terms of trade figures. The April 2015 figure of -$3.9 billion is the largest on record and three times worse than that recorded in March. This has a direct negative effect on national income (there has already been a $52 billion write-down in forecast tax receipts over the four years to 2017-18 since last year’s budget, primarily driven by a halving of the iron ore price and persistently low wage growth).

Click here to read the full version of our Economic & Market Outlook July 2015 for an update on the Australian and International economy.

Should you have any queries in relation to the above, please do not hesitate to contact the author or your Moore Stephens relationship partner.

Contact

Martin Fowler
Partner, Wealth Management
Moore Stephens Sydney
T +61 (0)2 8236 7776
mjfowler@moorestephens.com.au