According to the ABS’ Provisional Mortality Statistics, winter deaths fell below average due to COVID-19 social distancing restrictions: 92,015 doctor certified deaths occurred before 25 August. Deaths rose in the second half of winter but remain below average. Respiratory disease deaths have been lower than historical minimums since June… There were 7,941 deaths from respiratory diseases between 1
The “miracle” Australian economy (with its famous run of 24 years without a recession) is an amalgam of pre-modern and post-modern industries with very little in between.
Most economies run at least partially upon the productivity gains produced out of manufacturing and ‘making things’ but in Australia productive investment is supplanted with commodity exports (which make up half of exports) and the recycling of the resultant income is deployed as cash flow for borrowings offshore to pump house prices.
The former step is basically the selling of dirt, a pre-modern activity. The second step is managed via the sophisticated use of derivative markets and is essentially a post-modern activity.
Not that GDP cares given it is only the mindless measure of whirring widgets.
However, both of these activities systematically reduce economic competitiveness by inflating both input costs and the currency. “Dutch disease” by another name. This continuous “hollowing out” of productive activity means the broader economy relies heavily upon the non-stop import of capital, either in the form of debt or in the form of assets sold to foreigners, to generate ongoing income growth.
So long as the underlying income from dirt keeps flowing then the leveraging into house prices that supports consumption can continue, supported by both tax distortions and government spending.
If, however, the dirt income flow halts the hollowing out of modern industry will leave the Australian economy very exposed to a current account adjustment. We saw this in the global financial crisis but the flow of dirt income was restored sufficiently quickly to prevent any deep adjustment.
A second risk is that the debt accumulation simply becomes overly onerous for the underlying economy to service, also resulting in a current account adjustment. Well north of $1trillion of the debt is owned externally and household debt is a world-beating 186% of GDP so this is a real risk.
It is offset by a relatively clean public balance sheet that deploys fiscal stimulus in times of economic stress. However, in recent years, as both of the two above risks have increased, the public balance sheet has deteriorated as well, setting Australia up for a famous adjustment to end its famous bull run.
MacroBusiness covers all apposite data and wider analysis of these issues daily.
The South Australian Government has announced an overhaul of its hotel quarantine system after systemic failures led to an outbreak numbering 29 cases: South Australia has announced urgent plans to overhaul its medi-hotel system, amid a coronavirus cluster that emerged from Peppers Waymouth Hotel in Adelaide. Those changes include moving all people who test positive
Last week the Morrison Government signed the giant secret trade deal called the Regional Comprehensive Economic Partnership (RCEP). The RCEP is led by China and will also comprise members of the Association of Southeast Asian Nations plus Japan, South Korea, New Zealand and Australia. Now China has indicated that it is interested in joining the
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It’s a good day for Australia with only 4 new COVID-19 infections recorded overnight, none of which were locally acquired: Australia has recorded only 7 new local COVID-19 infections over the past week, all of which were in South Australia: Australia now has only 96 active COVID-19 cases, 41 of which are locally acquired: South
The Victorian Government yesterday released its 2020-21 State Budget, which will see the Government embark on a massive stimulus program in a bid to support 200,000 jobs within 18 months and 400,000 by 2025. Below are key extracts from Treasurer Tim Pallas’ speech combined with key figures from the Budget Papers: With Victoria’s gross state
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ANZ-Roy Morgan Aus Consumer Confidence broke an 11-week winning streak to fall 2%, as SA went into a short lockdown. With the lifting of restrictions in Vic and NSW, the impact may be short-lived. #ausecon #ausretail @roymorganonline @DavidPlank12 pic.twitter.com/vlfPuHetvu — ANZ_Research (@ANZ_Research) November 23, 2020
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