The one chart that tells the story of Australia's economic malaise
W&D is quite willing to blame politicians for most things that go wrong. And justifiably so.
But work with W&D on the following. Export-wise, Australia is really a hybrid quarry-farm. The quarry part is owned and operated by a few very large companies. Some run by idiots (BHP's-dividend-policy, come on down), others more successfully. The farm part is principally owned and operated by a myriad of individual farmers.
Aside from education (5% of exports) and tourism (4%), Australia's major exports are commodities. And commodity prices (in aggregate) are about to have their fifth consecutive year of price declines.
The Bloomberg Commodity Index is perhaps the most watched broadly-based commodity index. It tracks 20 commodities weighted for economic significance and market liquidity. Energy makes up 35% of the index; agriculture 29%; industrial metals 15%; precious metals 16% and livestock 5%. The index had a starting value of 100 as of 31-Dec-1990. It is now at 81, some 19 points below that starting point.
So it's not just about BHP, Rio and South32, its also about producers of wheat, cattle and sugar.
Source: Financial Times
Hmm. There is much work to be done to ease Australia from being a quarry-farm to a more diversified economy. Perhaps something upon which Napoleon Turnbull can focus when he gets over his jet lag.