Wry & Dry

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.

Bloomberg Commodity Index

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.