The good reviews continue. The OECD overnight delivered a somewhat sober assessment of world economic prospects but the Australian economy again emerged from the review as one of the developed world’s rare economic success stories.
The Organisation’s Interim Economic Assessment, presented in Paris by Chief Economist Pier Carlo Padoan, described how the global economy is slowing, with key European countries entering a recession that is now having an impact worldwide.
There’s a clear and simple description of world economic conditions in this video by Mr Padoan.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
He says that the G7 economies are expected to grow at an annualised rate of just 0.3 percent in the third quarter of 2012 and 1.1 percent in the fourth. It warns that the continuing euro area crisis is dampening global confidence, weakening trade and employment and slowing economic growth for OECD and non-OECD countries alike.
“Our forecast shows that the economic outlook has weakened significantly since last spring,” Mr Padoan said. “The slowdown will persist if leaders fail to address the main cause of this deterioration, which is the continuing crisis in the euro area.”
The OECD projects that the euro area’s three largest economies — Germany, France and Italy — will shrink at an annualised rate of 1 percent on average during the third quarter and at 0.7 percent in the fourth.
The look at Australia in the Interim Assessment is much more optimistic.
Yet more looking on the gloomy side. Charts like this one below are very fashionable at the moment as the media searches for news of gloom and doom about the Australian economy continues apace.
Look at that and you would think the iron ore boom was well and truly over. Look instead at this morning’s trade figures from the Australian Bureau of Statistics and you would learn something quite different. For while the media concentration has been on a decline in the spot price, mainly the Chinese version, most actual sales by the major miners are on contracts that are not immediately affected by changes in those spot prices.
Hence the relevance of these notes on the nation’s trade figures by the ABS:
On an international merchandise trade basis, in original terms …, between June and July 2012 large value movements were recorded for the following selected commodities:
- Iron ore lump rose $47m (4%) with quantities up 6% and unit values down 2%.
- China rose $90m (12%), quantities up 15% and unit values down 2%
- Republic of Korea fell $35m (26%), with quantities down 25% and unit values down 1%.
- Iron ore fines fell $42m (1%) with quantities up 4% and unit values down 5%.
- China rose $54m (2%), with quantities up 8% and unit values down 6%
- Taiwan fell $43m (47%), with quantities down 44% and unit values down 5%.
- Hard coking coal fell $383m (24%) with quantities down 22% and unit values down 2%.
- Taiwan fell $132m (92%) driven by quantities
- Republic of Korea fell $84m (52%), with quantities down 51% and unit values down 1%
- China fell $81m (100%), driven by quantities.
- Semi-soft coal rose $19m (3%) with quantities up 7% and unit values down 3%.
- China fell $53m (31%), with quantities down 28% and unit values down 4%
- India rose $17m (26%), with quantities up 23% and unit values up 3%.
- Thermal coal rose $122m (9%) with quantities up 13% and unit values down 4%.
- China fell $143m (37%), with quantities down 32% and unit values down 6%
- Republic of Korea rose $125m (86%), with quantities up 100% and unit values down 7%
- Japan rose $63m (9%), with quantities up 14% and unit values down 4%.
A Gillard revival. Optimism about Julia Gillard remaining as Labor leader until the next federal election has increased considerably. The Crikey Indicator how has her back with a probability of over 50%
News and views noted along the way: