By MILLIE MUROI, Economics WriterWhile the US president-elect would have you believe a trade deficit is a wicked thing, it’s not a hard and fast rule. In fact, it can actually be good. We’ve become used to the word “deficit” being synonymous with “bad” (think about how many governments highlight when they’ve got a “budget deficit” – not a lot!). But deficits don’t have to be bad.Since late 2016, Australia has had a run of trade...
Showing posts with label exports. imports. Show all posts
Showing posts with label exports. imports. Show all posts
Friday, December 13, 2024
Saturday, August 15, 2020
The last thing we need: neutering the free-trade referee
With the coronavirus putting the world economy into its worst dive in almost a century, it would help if the surviving trade in goods and services between countries was continuing in an orderly way. But, as if we didn’t have enough problems, the future of the international body responsible for ensuring free and fair trade, the World Trade Organisation, is in grave doubt.
The eternal temptation in international trade is protectionism:...
Saturday, June 13, 2020
The tables have turned in our economic dealings with the world
If you know your economic onions, you know that our economy has long run a deficit in trade with the rest of the world which, when you add our net payments of interest and dividends to foreigners, means we’ve long run a deficit on the current account of our balance of payments and, as a consequence, have a huge and growing foreign debt.
Except that this familiar story has been falling apart for the past five years, and is no...
Saturday, March 14, 2020
Too soon to say how hard virus will hit economy
To judge by the gyrations of the world’s sharemarkets, the coronavirus has us either off to hell in a handcart or the markets are panicking about something bad that’s happening, but they’re not sure what’s happening, how long it will last or how bad it will end up being. I’d go with the latter.
So would Reserve Bank deputy governor Dr Guy Debelle. He said in a speech this week that there’s been a large increase in the financial...
Saturday, October 12, 2019
Why surpluses aren't necessarily good, or deficits bad
According to the Essential opinion poll, only 6 per cent of people regard the size of the national surplus as the most important indicator of the state of the economy. I think that’s good news, but I’m not certain because I’m not sure what “the national surplus” is – or what the respondents to the poll took it to mean.
They probably thought it referred to the balance on the federal government’s budget. But the federal budget...
Saturday, August 31, 2019
If you think surpluses are always good, prepare for great news
Don’t look now, but Australians’ economic dealings with the rest of the world have transformed while our attention has been elsewhere. Business economists are predicting that, on Tuesday, we’ll learn that the usual deficit on the current account of the balance of payments has become a surplus.
If so, it will be the first quarterly surplus in 44 years. If not, we’ll come damn close.
You have to be old to appreciate what a remarkable...
Saturday, December 15, 2018
Trump's mad trade war has a hidden logic
Simple economics tells us Donald Trump’s stated reasons for starting a trade war with China make no sense. But more advanced economics tells us it’s no surprise he’s 'P’d off' over China’s economic rise.
Trump complains that the United States buys more from China than China buys from the US, meaning his country runs a trade deficit with China. He sees this as an obvious injustice and a sign China is cheating.
But economics...
Wednesday, September 27, 2017
Closing out the world won't fix our problems
Talk about a slow burn. It's 10 years since the beginnings of the global financial crisis, the greatest economic collapse any of us will ever see. Things ought to be back to normal by now, but they aren't.
The world is still picking through the wreckage, deciding what should be kept and what dispensed with. What needs to be done differently to restore normality and ensure there's never another disaster like that one.
A lot...
Saturday, July 15, 2017
Why global trade growth has slowed
One thing you can be sure of is that international trade grows much faster than the world economy. It's the classic proof of growing globalisation, and it's been happening for ages. Except that it seems to have stopped.
For two decades from the mid-1980s, world trade – measured as exports plus imports – grew at more than double the rate of growth in gross world product.
Between 1986 and 2007, the volume of trade grew at an...
Saturday, April 8, 2017
Why we needn't worry about our massive foreign debt
When you consider how many people worry about the federal government's debt, it's surprising how rarely we hear about the nation's much bigger foreign debt. When it reached $1 trillion more than a year ago, no one noticed.
That's equivalent to 60 per cent of the nation's annual income (gross domestic product), whereas the federal net public debt is headed for less than a third of that – about $320 billion – by June.
Similarly,...
Saturday, August 20, 2016
Big change ahead for China and our export challenge
You don't need me to tell you we lucked out when we sited our island continent not too far from China. But will our luck hold?
Or, more pointedly, what do we have to do to ensure we stay lucky?
A major report, released this week, Partnership for Change, seeks to answer that question. It was prepared jointly by Professor Peter Drysdale, of the East Asian Bureau of Economic Research at the Australian National University, and...
Saturday, March 12, 2016
China still our advantage in a dismal world
We are living in an era of exceptionally weak growth in the world economy. We can now look back and see that era began after the global financial crisis in 2008. We can look forward and not see when the era will end. It could be years, for all we know.
Naturally, this continuing global weakness has its effect on us. So we shouldn't blame ourselves for our own weaker growth relative to our earlier performance. Rather, we should...
Wednesday, March 9, 2016
Where the jobs will come from
It's a question doubting customers have been asking me through the whole of my career: but where will all the jobs come from? We worry about jobs, convinced there's never enough of them.
Whenever we're in a recession, with unemployment high and rising, people simply can't see how we'll ever get it down again.
In the more recent resources boom, a lot of people got jobs in faraway places helping to build new mines and natural...
Saturday, January 30, 2016
Economy will look better when mining investment stops falling
Here's a little tip for the start of another working year: if you want to make much sense of the economy, you need a good feel for arithmetic.
Thanks to our obsession with economic growth, we're almost always focusing on the change in economic indicators like gross domestic product and its components, such as consumer spending, business investment, imports and exports. (And the figures we look at are usually "in real terms"...
Wednesday, January 27, 2016
Why it shouldn't be a bad year for our economy
Thanks for asking. Yes, I enjoyed my holiday – read some good books I'll tell you about later – but, unfortunately, didn't get far enough away from the media to avoid hearing all the gloomy news about the economy.
The Americans raised interest rates, the Chinese sharemarket fell, oil prices fell, share prices fell around the world, our dollar fell, the Chinese announced their economy was growing quite strongly, which everyone...
Saturday, December 5, 2015
Economy's transition grinds on, despite quarterly bumps
What an exciting week it's been for lovers of thrills and spills in the economy. This time three months ago they were telling us it was near to subsiding into recession in the June quarter, but now they're telling us it took off like a rocket in the September quarter.
Phew, what a miraculous escape. Or what a load of cods, brought to us by those who've learnt nothing from years of watching the national accounts' gyrations in...
Saturday, September 5, 2015
Contrary to reports, economy battles on
Joe Hockey is right. The economic news is hardly wonderful, but the media's attempt this week to convince us the economy was perilously close to recession was sensationalist nonsense.
What set them off was news from the Australian Bureau of Statistics' national accounts that real gross domestic product grew by just 0.2 per cent in the June quarter. What they forgot to mention was that in the previous quarter it had grown by...
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