Citigroup chief global equity strategist Robert Buckland is on the hustings at the AFR making some very pointed remarks about the structure of Australia’s economy:
“The thing that always worries me about Australia is that it runs a current account deficit, and that is even after god knows how many years of the most awesome commodity price increases you have ever seen…Brazil is the same. If you can’t have current account surplus in the last 10 years, when will you ever?…What does Australia make that the rest of the world wants? That is the killer question. You have good companies but you have to have ones that not just sell to Australian people. They have to be ones that sell stuff that the rest of the world wants….That is what you fall back on when Rio Tinto is not digging so much stuff out of the ground. As someone who speaks to investors who put money anywhere, that is the question I get asked most about Australia – what else is there besides commodities?”
That’s not fair! We make houses too and export citizenship!
More seriously, Mr Buckland’s point about investors asking what else we do beyond dirt will be very important in the future. As the Budget inexorably deteriorates and loses its AAA luster, and we next endure a global or regional shock that crashes commodities, it is that question that investors will ask themselves when reconsidering whether or not to approve our national application for refinancing.
In the mean time there was more bad news from the same Citi conference in London from which the quotes emanated. According to Asciano CEO John Mullen, Australian port and rail volumes are showing no signs of recovery:
“It has been flat now for a couple of years. That is puzzling as we are still a consuming nation, we are still an island, our manufacturing industry is not taking up the slack, we are importing,” Mr Mullen toldThe Australian Financial Review.
“We are hopeful we will see a lift sooner rather than later but there is no evidence to support it. That is why we are taking more cost measures. You don’t want to die waiting.”
One jobless recovery coming up.
