Australian Economy Thread

catbear

Interesting time in WA. Atlas Iron suspends production.

catbear

During the boom years of the so-called commodities “super cycle” when China couldn’t buy enough of everything that Australia dug out of the ground, the country’s economy resembled oil-rich Saudi Arabia.
While the rest of the world suffered from the aftermath of the global financial crisis, Australia’s economy – closely tied to China – appeared impervious, with full employment and a healthy trade surplus.

Iron ore is now trading at around $50 per tonne, compared with a peak of around $180 per tonne achieved in 2011. Thermal coal has also suffered heavy losses, now trading at around $60 per tonne compared with around $150 per tonne four years ago.

For an economy which in 2012 depended on resources for 65pc of its total trade in goods and services these dramatic falls in prices are almost impossible to absorb without inflicting wider damage. The drop in foreign currency earnings has seen Australia forced to borrow more in order to maintain government spending.

Although recent surveys of business confidence have been encouraging, outside mining the economy appears hopelessly weighted to the only other area of significant growth, real estate.
The problem is that Australia, after decades of effort to diversify, is looking ever more like a petrodollar economy of the Middle East, but without the vast horde of foreign currency reserves to fall back on when commodity prices fall.

http://www.independent.ie/business/world/could-australia-become-the-new-greece-31389120.html

catbear

With the good times looking like they are coming to an end and unemployment trending upwards – though at 6.3 per cent it is still far lower than in most western countries – it is no surprise fewer skilled migrants are coming to Australia and others are returning to their homelands, including Ireland.
Eamon Eastwood, chief executive of Taste Ireland, which imports Irish products to Australia, says sales through supermarkets have been increasing, but online sales – which are more likely to be orders from expats – are static. Mr Eastwood is also involved with Cormac McAnallen GAA club in Sydney. He says club members are going back to Ireland. “There’s definitely been a trickle of people going home. Numbers are slightly down at some of the clubs, so there are some signs of people going back.”

http://www.irishtimes.com/business/economy/crisis-down-under-the-doomsayers-may-finally-be-right-1.2323172

Meanwhile todays Shaghai stock plunge takes the Aus$ down to .63c/€.

catbear

I took my eye off the ball and didn't lock in gains last year, fund is down roughly 6% from peak. I'm cashing out now but those who are in Aus for the foreseeable future may want to think about moving more into cash for the next while.

lg123

what currency is the magic question?!

catbear wrote: »

I took my eye off the ball and didn't lock in gains last year, fund is down roughly 6% from peak. I'm cashing out now but those who are in Aus for the foreseeable future may want to think about moving more into cash for the next while.

catbear

lg123 wrote: »

what currency is the magic question?!

Don't know. We did well with the Aus$ when it was strong on the back of the Chinese commodity splurge, that's over. The NZ$ has been less volatile than the Aus$ over the last ten years, their soft commodities like agri produce have a constant demand as opposed to the hard commodity gold rush nature of OZ.

I have to move to the UK later this year but I'm holding off buying the £ and hopefully cash in on volatility around Brixet; plus the UK is possibly the most exposed of european countries to slowdowns in China. The £ already lost a good bit against the Euro since the Chinese stock tumble at the start of January.

Edit to add: When I said "move to cash" I meant restructure your superannuation account away from shares and more towards cash in australia; not foreign currency. I had reduced my exposure but still got burned whereas my wife is totally risk adverse switched her super fund completely to cash at the same and her fund lost nothing. A lot of superannuation providers allow you to reconfigure your fund online, just check with them. I feel like a bit of idiot for not taking my own advice and forgetting about it. Probably lost a good bit in the first week of Jan.

lg123

yup, i got burned with some GBP i was holding too. was almost cancelled out with the USD I had but a little more attention would have probably kept me in the green.