Global Financial Crises In Australia
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The Global Financial CrisisIN AUSTRALIA
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Outline
Pre-crisis Economic & Financial Market Conditions
The Impact of the Global Financial Crisis
The Policy Response to the Financial Crisis
The Economic Outlook Tasmania and the Crisis Medium term challenges and
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Chart 1: World Economic Growth
Source: IMF and Treasury.
0
1
2
3
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6
1997 1999 2001 2003 2005 20070
1
2
3
4
5
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Average World Growth since 1980 = 3.3 per cent
Per cent Per cent
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Chart 2: Merchandise World Trade
Source: World Trade Organization (WTO)
100
115
130
145
160
175
Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09
100
115
130
145
160
175Index Index
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Chart 3: US & Australia Stock Prices
Source: Thomson Reuters
2000
3000
4000
5000
6000
7000
8000
Oct-2002 Oct-2003 Oct-2004 Oct-2005 Oct-2006 Oct-2007 Oct-2008 Oct-2009
600
800
1000
1200
1400
1600
1800
ASX200 (LHS)
S&P500 (RHS)
Collapse of Lehman Bros.
Index Index
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Chart 4: Corporate Bond Spreads
Note: Find data that shows narrowing of spread, then widening, and then gradual reduction.
Source: Bloomberg.
0
300
600
900
1200
1500
Sep-02 Jul-03 Apr-04 Feb-05 Nov-05 Sep-06 Jul-07 Apr-08 Feb-09 Nov-09
0
300
600
900
1200
1500Basis point Basis point
AA
BB
B
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Chart 5: Commodity Price Index
Note: To be changed to RBA Commodity Price Index
Source: Reserve Bank of Australia.
0
63
125
188
250
Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09
0
35
70
105
140
Index of Base Metals Prices (LHS)
Index of non-Rural Commodity Prices
Index Index
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Chart 6: Terms of Trade
Source: ABS Catalogue Number 5302.0 and Treasury.
Note: Only latest forecast needed
50
70
90
110
130
1992-93 1994-95 1996-97 1998-99 2000-01 2002-03 2004-05 2006-07 2008-09
50
70
90
110
130Index (2006-07 = 100) Index (2006-07 = 100)
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Chart 7: Industrial Production
Note: Other East Asia* excludes Vietnam, Hong Kong, China and Japan.Source: Relevant National Statistical Agencies and Treasury calculations.
United States euro area
China Other East Asia and Japan
90
95
100
105
110
Sep-00 Mar-02 Sep-03 Mar-05 Sep-06 Mar-08 Sep-09
90
95
100
105
110Index (2000 = 100) Index (2000 = 100)
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90
100
110
120
Aug-00 Feb-02 Aug-03 Feb-05 Aug-06 Feb-08 Aug-09
80
90
100
110
120Index (2000 = 100) Index (2000 = 100)
0
100
200
300
400
Sep-00 Mar-02 Sep-03 Mar-05 Sep-06 Mar-08 Sep-09
0
100
200
300
400Index (2000 = 100) Index (2000 = 100)
70
95
120
145
170
Aug-00 Feb-02 Aug-03 Feb-05 Aug-06 Feb-08 Aug-09
70
95
120
145
170
Other East Asia*
Japan
Index (2000 = 100) Index (2000 = 100)
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Chart 8: IMF 2009 GDP GrowthAdvanced World
-4
-2
0
2
4
Apr-08 Oct-08 Apr-09 Oct-09
-4
-2
0
2
4Per cent Per cent
-4
-2
0
2
4
Apr-08 Oct-08 Apr-09 Oct-09
-4
-2
0
2
4Per cent Per cent
Source: International Monetary Fund.arifanees.com - Information - Inspiration - Transformation 10
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0
5
10
15
20
25
30
Recession Recovery Expansion
0
5
10
15
20
25
30
OECDFinancial crisisHighly synchronisedFinancial crises that are synchronised
No of quarters No of quarters
Chart 9: IMF research on dynamicsof recession and recovery
Source: International Monetary Fund.
Duration Amplitude
-5
0
5
10
15
20
25
Recession Recovery Expansion
-5
0
5
10
15
20
25
OECDFinancial crisisHighly synchronisedFinancial crises that are synchronised
Per cent Per cent
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Chart 10: Official Cash Rate
Source: Reserve Bank of Australia and Treasury.
2.5
3.5
4.5
5.5
6.5
7.5
Aug-96 Nov-97 Feb-99 May-00 Aug-01 Nov-02 Feb-04 May-05 Aug-06 Nov-07 Feb-09
2.5
3.5
4.5
5.5
6.5
7.5
Policy rate
Average since August 1996
Per cent Per cent
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Chart 11: Interest Rates
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3
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11
Aug-96 Feb-98 Aug-99 Feb-01 Aug-02 Feb-04 Aug-05 Feb-07 Aug-08
2
3
4
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6
7
8
9
10
11
Cash rate
Standard Variable Mortgage
Small Business Residentially Secured
Per cent Per cent
Source: Reserve Bank of Australia and Treasury.arifanees.com - Information - Inspiration - Transformation 13
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Chart 12: Exchange Rates
Source: Reserve Bank of Australia.
0.50
0.60
0.70
0.80
0.90
1.00
Jan-08 May-08 Sep-08 Jan-09 May-09Sep-09
0.50
0.60
0.70
0.80
0.90
1.00
$US/AUS
$US $US
50.0
55.0
60.0
65.0
70.0
75.0
Jan-08 May-08Sep-08 Jan-09 May-09 Sep-09
50.0
55.0
60.0
65.0
70.0
75.0
TWI
Index Index
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Chart 13: Composition of stimulus
Source: Treasury.
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2nd Half2008
1st Half2009
2nd Half2009
1st Half2010
2nd Half2010
1st Half2011
2nd Half2011
1st Half2012
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
Transfers COAG reforms Investment
Per cent of annual GDP Per cent of annual GDP
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Chart 14: Estimated Impact of Stimulus: GDP
Source: ABS Catalogue Number 5206.0 and Treasury.
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98
100
102
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106
108
Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11
96
98
100
102
104
106
108
Pre-stimulus
Post-stimulus
Forecasts
Index (Sep 08 = 100) Index (Sep 08 = 100)
Forecasts
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Chart 15: Estimated Impact of Stimulus: unemployment rate
Source: ABS Catalogue Number 6202.0 and Treasury.
0
2
4
6
8
10
Jun-07 Jun-08 Jun-09 Jun-10 Jun-11
0
2
4
6
8
10
Pre-stimulus
Post-stimulus
Forecasts
Per cent Per cent
Forecasts
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Chart 16: Contribution of fiscal stimulus to GDP Growth
Source: Treasury.
-0.8
-0.4
0.0
0.4
0.8
1.2
Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11
-0.8
-0.4
0.0
0.4
0.8
1.2Percentage points Percentage points
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Chart 17: International Comparison of GDP growth (year to June 2009)
Source: International Monetary Fund.
-10
-8
-6
-4
-2
0
2
Slo
ven
ia
Fin
lan
d
Ta
iwa
n
Ire
lan
d
Jap
an
De
nm
ark
Sw
ed
en
Italy
Ge
rma
ny
UK
Slo
vaki
a
Lu
xem
bo
urg
Ne
the
rla
nd
s
Cze
ch R
ep
.
No
rwa
y
Au
stri
a
Sp
ain
US
Ho
ng
Ko
ng
Be
lgiu
m
Po
rtu
ga
l
Sin
ga
po
re
Ca
na
da
Ice
lan
d
Ma
lta
Fra
nce
Ko
rea
NZ
Sw
itze
rla
nd
Cyp
rus
Isra
el
Gre
ece
Au
stra
lia
-10
-8
-6
-4
-2
0
2Per cent Per cent
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Chart 18: Unemployment rate
Source: ABS Catalogue Number 6202.0, Thomson Reuters and Treasury.
Note: Need to include OECD average
3
5
7
9
11
13
Jun-88 Mar-94 Dec-99 Sep-05 Jun-11
3
5
7
9
11
13
Australia
OECD
Per cent Per cent
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Chart 19: ConfidenceBusinessesConsumers
Source: Westpac-Melbourne Institute, National Australia Bank, DX and OECD.
-5
-4
-3
-2
-1
0
1
2
Nov-06 Nov-07 Nov-08 Nov-09
-5
-4
-3
-2
-1
0
1
2
Australia
OECD
Standard deviations from long-run average
-5
-4
-3
-2
-1
0
1
2
Oct-06 Oct-07 Oct-08 Oct-09
-5
-4
-3
-2
-1
0
1
2
Australia
OECD
Standard deviations from long-run average
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Chart 20: Retail Trade in Australia and major advanced economies
90
95
100
105
110
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09
90
95
100
105
110
G7
Australia
Index (Jan 08 = 100) Index (Jan 08 = 100)
Source: ABS Catalogue Number 8501.0 and Thomson Reuters.arifanees.com - Information - Inspiration - Transformation 22
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Chart 21: Australian Retail Trade
Source: ABS Catalogue Number 8501.0.
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18
19
20
Oct-07 Apr-08 Oct-08 Apr-09 Oct-09
17
18
19
20
Seasonally adjusted Trend
$billions $billions
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Chart 22: Construction Work Done
Source: ABS Catalogue Number 8755.0.
20
22
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28
30
Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09
4
6
8
10
12
14
Private (LHS)
Public (RHS)
$billion $billion
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Chart 23: China GDP
Source: CEIC China database and Treasury..
0
3
6
9
12
15
1995 1997 1999 2001 2003 2005 2007 2009 2011
0
3
6
9
12
15Per centPer cent
Forecasts
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Chart 24: GDP growth
Source: ABS Catalogue Number 5206.0 and Treasury.
-4
-2
0
2
4
6
8
1977-78 1983-84 1989-90 1995-96 2001-02 2007-08 2013-14
-4
-2
0
2
4
6
8
30-year average
80s recovery 90s recovery
Forward estimates
Per cent Per cent
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Chart 25: Domestic Final Demand
Source: ABS Catalogue Number 5206.0 and Treasury.
-2
0
2
4
6
8
10
Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09
-2
0
2
4
6
8
10
Australia
Tasmania
Queensland
Per cent Per cent
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Chart 26: Unemployment rate
Source: ABS Catalogue Number 6202.0.
3
4
5
6
7
Oct-07 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09
3
4
5
6
7
Tasmania
Australia
Queensland
Per cent Per cent
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Chart 27: Trend Unemployment
0
2
4
6
8
10
12
14
Feb-78 Apr-81 Jun-84 Aug-87 Oct-90 Dec-93 Feb-97 Apr-00 Jun-03 Aug-06 Oct-09
0
2
4
6
8
10
12
14
Australia
Tasmania
Per cent Per cent
Source: ABS Catalogue Number 6202.0.arifanees.com - Information - Inspiration - Transformation 29
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Chart 28: Gross Household disposable income per capita (current prices)
Source: ABS Catalogue Number 5220.0.
$0
$5
$10
$15
$20
$25
$30
$35
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
$0
$5
$10
$15
$20
$25
$30
$35
Tasmania
Australia
$'000 per capita $'000 per capita
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Chart 29: Employment to Population Ratio
Source: ABS Catalogue Number 6202.0.
50.0
52.5
55.0
57.5
60.0
62.5
65.0
Oct-79 Oct-84 Oct-89 Oct-94 Oct-99 Oct-04 Oct-09
50.0
52.5
55.0
57.5
60.0
62.5
65.0
Tasmania
Australia
Per cent Per cent
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Chart 30: Full Time Employment to Population Ratio
35.0
40.0
45.0
50.0
55.0
60.0
65.0
Oct-79 Oct-84 Oct-89 Oct-94 Oct-99 Oct-04 Oct-09
35.0
40.0
45.0
50.0
55.0
60.0
65.0
Tasmania
Australia
Per cent Per cent
Source: ABS Catalogue Number 6202.0.arifanees.com - Information - Inspiration - Transformation 32
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Chart 31: Observed Changes in Rainfall Reliability
Source: Bureau of Rural Sciences.arifanees.com - Information - Inspiration - Transformation 33
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Chart 32: Population settlement patterns
Source: Center for International Earth Science Information Network 2005, Columbia University;and Centro Internacional de Agricultura Tropical (CIAT). Gridded Population of the World,Version 3. Palisades, NY: CIESIN, Columbia University.
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Chart 33: China, India Convergence
Source: The Conference Board Total Economy Database, IMF and Treasury.
0
20
40
60
80
100
0 4 8 12 16 20 24 28 32 36 40 44 48 52
0
20
40
60
80
100
Japan (1955-2008)
NIEs (1968-2008)
ASEAN-4 (1973-2008)
China (1980-2008)
India (1982-2008)
Years after take-off
Per cent of US GDP per capita ($PPP) Per cent US GDP per capita ($PPP)
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