Two great charts from UBS which show, as I have argued here for a while now, that Australia's growth pulse is being driven by the developing, rather than the developed, world. Some time ago I also put up a CBA chart that illustrated that 30 per cent of global growth over the last 10 years has come outside of North America and Europe.
There is some irony here for the RBA, which I have pointed out privately. On the one hand, the RBA has been telling the media, economists and investors to stop obsessing about the ‘North Atlantic’ economies, and to start recognising that Australia's economic destiny is hitched to the more rapidly growing developing world. Yet it is very clear that monetary policy in Australia is being determined by what happens in the old world in spite of the RBA's purported confidence that it is less relevant to the new one.
The first UBS chart below tells us that Australia's trading partners are growing more quickly than overall ‘World GDP’, which is a recent innovation. In the past, our trading partners have actually grown at lower rates than the World average (such as, between 1995 and 2001). The second chart shows that Australian now sends 65 per cent of its goods exports to 'developing' countries – a massive increase on past patterns – and 75 per cent to Asia.
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