Accolades for us from the rest of the normal world . Just shows how talk back radio announcers are so shallow ...cheers eG

http://www.smh.com.au/news/business/aus ... 49054.html

more accolades

Basically reasons are
1. high pop growth
2. abundant natural resources
3. strong shareholder protection, enshrined property rights and corporate governance so it translated into share-market returns.
4. high dividend yields - forces companies to be more disciplined with their capital

a broker view ------------

Event:
• We have upgraded our Australian GDP growth forecasts in 2009. We now expect 1.0% (0.8% previously); in 2010 we expect growth of 3.5% (3.3% previously) and our initial forecast for 2011 is 3.5%. We also expect the RBA to raise rates to 5.5% by end-2011.

Key Points:
• We are optimistic over the outlook for the global economy. We now forecast global growth of 4.4% for 2010, and a higher 4.5% for 2011. We are above consensus for next year and, while there is no consensus as such for 2011, we suspect we are significantly higher than consensus for 2011 also. With respect to inflation, we are below consensus, despite
our relative optimism on GDP. If this is correct, the combination of better than expected growth and lower than expected inflation should be good news for financial markets.
• As such the global context in which frame our Australian view is a world where the drivers of global demand are concentrated heavily amongst Australia’s major trading partners and a world where excess existing excess liquidity in the East will be supplemented by expansionary monetary policies in the West. The prospect of this excess liquidity continuing to wash into domestic demand growth and asset price inflation within our region is high.
• In concert with Australian policy settings of expansionary fiscal and financial conditions and the continued positive run of economic data into the end of 2009 we have upgraded our Australian GDP growth forecasts. In 2009 we now expect 1.0% (0.8% previously); in 2010 we expect growth of 3.5% (3.3% previously) and our initial forecast for 2011 is 3.5%.
• Within this profile we envision a profile where GDP growth accelerates to close to a 4%yoy pace by mid-2010, reflecting a strong sequential acceleration in 1H10. This sharp reacceleration will be supported by a clear restocking of inventories, a strong bounce in dwelling investment and a solid support provided by a reacceleration in consumption
volumes. Looking into the second half of 2010 we have pencilled in some sequential moderation reflecting the lagged impacts of tightening financial conditions, some relatively modest fiscal fade, the passing of the inventory contribution and some slowing in the contribution from the housing rebuild. Nevertheless, we believe that a reacceleration in
economic growth will occur through the course of 2011, with economic growth starting 2011 at a trend-like 3.2%yoy pace and finishing the year at 4.2%yoy pace.

Investment View:
• The strong rebound in Australian economic growth is set to be delivered in the context of very limited spare capacity. In conjunction with high inflation pressures emanating from the public sector, some evidence that the disinflation impetus from China is ending and the threat of resurgent private demand adds to the risks to inflation in 2010 and 2011. We
expect Australia's headline inflation to average 2.8% in 2010 and 3.3% in 2011. The implication for interest rates is that the RBA will continue to push rates higher in 1H10 to 4.5% before recommencing the rate tightening in late 2010 and through 2011. While this is not a change from our current view, we see an additional 75bp in hikes in 2011 with the RBA’s cash rate peaking at 5.5% by end 2011. By inference the A$ risks remain to the upside.

Aspects of Australia’ Finances - Ric Battellino. Deputy Governor RBA

Address to Financial Executives International of Australia . Sydney - 15 June 2010

http://www.rba.gov.au/speeches/2010/sp-dg-150610.html

....I want to deal with three questions that often come up when I talk to analysts and bankers from overseas. These are:
- are Australian households over-geared?
- does Australia have too much foreign debt? and
- do Australian banks rely too much on foreign wholesale funding?

Before I move on to these questions, I should note that, in my experience, foreigners never ask about government debt in Australia, or corporate debt for that matter. It is not hard to understand why, as both government and corporate debt in Australia are low by international standards. ..... ..........................

...Conclusion
You may have noticed that I have not given categorical answers to the three questions I listed at the start of my talk. This is because I don’t think it is possible to give simple ‘yes’ or ‘no’ answers to these questions.

However, looking at a broad range of financial data, and considering the fact that the Australian economy and financial system have exhibited a high degree of stability over many years, despite the many global events that have tested their resilience, is, I think, grounds for confidence that the economic and financial structure that has evolved in Australia is sustainable.
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Lots of pretty graphs. well worth a read.

including this ""...Following the floating of the exchange rate and the removal of capital controls in the early 1980s, both foreign investment in Australia and Australian investment abroad increased sharply as the Australian economy became more integrated into the global financial system (attached). In net terms, capital inflows increased from around 2 per cent of GDP to around 4 per cent, and, in the latest decade, to an average of almost 5 per cent of GDP. The current account deficit widened correspondingly, since with a floating exchange rate the current account and capital account balances must be equal and offsetting, both being determined simultaneously through the interaction of a wide range of economic and financial forces. ....
Expressing foreign liabilities relative to GDP is, perhaps, the most common way in which people analyse them. For emerging markets, this measure has been shown to have some association with vulnerability to balance of payments crises. This is because emerging market economies often have a fixed or managed exchange rate and their foreign liabilities tend to be denominated in foreign currency, rather than domestic currency. In such instances a rise in the ratio of foreign liabilities to GDP does indicate increased vulnerability as it signals an increase in the country’s foreign exchange risk and liquidity risk.

For a developed economy that can borrow overseas in its own currency, and which has a floating exchange rate, the significance of a rise in the ratio of foreign liabilities to GDP is less clear. It also needs to be kept in mind that, as economies develop, most financial variables rise relative to GDP. This seems to be a consequence of financial deepening. Expressing net foreign liabilities as a percentage of the total financing in the economy is, perhaps, more relevant, since it gives some indication of the proportion of the economy’s funding that is coming from offshore. In Australia, this ratio has remained relatively steady since the late 1980s, at a little over 20 per cent.

Foreign liabilities can also be measured relative to the physical capital stock of the country, giving an indication of the proportion of the capital stock being funded by foreigners. This ratio, too, has been relatively steady in Australia since the late 1980s, at around 10 per cent. ..."

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