Once derided as the Pacific Peso, the Australian dollar has also been at historic highs against the US dollar, which is seen as totemic of the country's economic strength and resilience.
The bi-polar economy as suggested by Heather Ridout, the chief executive of the Australian Industry Group, a leading business lobbyist with a close grasp of the balance-sheet realities for companies in the manufacturing, retail, education and tourism sectors. Has had its tale of twin identities with one face of the booming side and the other face of the gloomy side.
The Australian Bureau of Statistics, in its report claimed that Australia's economy bounced back in the June quarter where the Gross domestic product rose by 1.2% and Non-farm GDP increased 0.4% in the June 2011 quarter. GDP per hour worked in the market sector fell 0.3% and the Terms of Trade rose 3.4%. In seasonally adjusted terms, GDP and Non-farm GDP both increased by 1.2% in the June quarter. The Terms of trade rose 5.4% and real gross domestic income rose 2.6%.
As on the expenditure on GDP in seasonally adjusted terms, the main contributors to expenditure on GDP were Inventories (0.8 percentage points) and Final consumption expenditure (0.7 percentage points). Net Exports (-0.5 percentage points) was the largest detractor.
As per the Industry gross value added, In seasonally adjusted terms, Manufacturing (up 2.8%) and Transport, postal and warehousing (up 4.4%) both contributed 0.2 percentage points to the increase in GDP.
Now getting back on the core issue of the bipolar nature, the segments on the gloomy side were found in the country's shopping malls, factories and tourist resorts. Those parts of the economy are witnessing a spending strike from cautious consumers. In a country where spending has outpaced income for the past decade, the household savings rates has gone up to 11.5%. Some 20,000 manufacturing jobs have gone this year, and the Australian Industry Group claims that the modeling underpinning the carbon tax suggests that 200,000 jobs will go over the next 10 years.
Then there is the broader, more structural question of whether Australia is in danger of succumbing to the Dutch disease, a phrase coined by The Economist in the early 70s which described the decline of Dutch manufacturing in the wake of the discovery of a large natural gas field in the 1950s.
The boom side is centered on the resources sector, which is contributing to the country's best terms of trade in 140 years. Metal ores and coal account for 40% of the country's export receipts. Significantly, exports to Asia now account for 60% of the overall total.
The mining boom has made Australian economically complacent, and reduced the need to adequately invest in higher education, trade apprenticeships and research and development. Right now, Australia's national prosperity is based on digging things up rather than being inventive, creative or ingenious. And crucially, its own economic strength is increasingly dependent on China's inexorable rise, which makes it vulnerable to shocks.
