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INTERNATIONAL ECONOMIC
DEVELOPMENTS
MIKE CALLAGHAN
Executive Director (International)
Australian Treasury
Australia – Japan Economic Outlook Conference
24 November 2011
‘Since we last met, the global recovery continues
to advance but downside risks remain.’
G20 Seoul Leaders Declaration
– 11-12 November 2010
‘The global recovery is strengthening but is still
uneven and downside risks remain. While most
advanced economies are seeing modest growth
and persisting high unemployment, emerging
economies are experiencing more robust
growth, some with signs of overheating.’
G20 Finance Ministers and Central Bank
Governors Communique – 18-19 February 2011
‘The global recovery is broadening and
becoming more self-sustained, with
increasingly robust private demand growth.
But downside risks still remained.’
G20 Finance Ministers and Central Bank
Governors Communique – 14-15 April 2011
‘The global recovery has entered a new and
difficult phase. Global growth has weakened,
downside risks have heightened, and
confidence has waned. Uncertainty over the
sustainability of public debt levels in some
advanced economies has increased, and the
rebalancing in demand from the public to the
private sector has not materialized.’
Cannes G20 Leader Summit – 3-4 November 2011
Global growth moderating
6
Per cent
Per cent
5
6
5
2011
4
4
3
3
2010
2
2
2009
1
1
0
0
-1
-1
-2
Apr-08
Source: IMF.
Oct-08
Apr-09
Oct-09
Apr-10
Oct-10
IMF forecasts by date of publication
Apr-11
Oct-11
-2
Apr-12
‘our sense is that if we do not act boldly and if
we do not act together, the economy around
the world runs the risk of [a] downward spiral
of uncertainty, financial instability and
potential collapse of global demand ... we
could run the risk of what some commentators
are already calling a lost decade.’
IMF Managing Director, Christine Lagarde –
9 November 2011
Growth forecasts lowered
GDP (%, year average)
2011
Advanced Economies
United States
Euro area
Germany
Italy
Japan
Emerging economies
China
World
2012
April 2011
WEO
September
2011 WEO
October 2011
Consensus
April 2011
WEO
September
2011 WEO
October 2011
Consensus
2.4
2.8
1.6
2.5
1.1
1.4
6.5
9.6
4.4
1.6
1.5
1.6
2.7
0.6
-0.5
6.4
9.5
4.0
n.a.
1.7
1.6
2.9
0.7
-0.5
n.a.
9.1
3.9
2.6
2.9
1.8
2.1
1.3
2.1
6.5
9.5
4.5
1.9
1.8
1.1
1.3
0.3
2.3
6.1
9.0
4.0
n.a.
1.9
0.6
1.0
0.0
2.2
n.a.
8.5
3.8
Note: Consensus countries make up around 95 per cent of global GDP on a PPP basis, with the remainder estimated using IMF WEO growth rates.
Consensus for India is for fiscal years, which commence 1 April. n.a. = Not available.
Source: IMF World Economic Outlook April 2011 and September 2011, Consensus Economics.
Recovery since the crisis
110
Index (Jun-08=100)
Index (Jun-08=100)
105
110
105
Australia
United States
100
100
euro area
95
95
Japan
90
90
85
Jun-08
Jul-09
Source: National statistical agencies, Thomson Reuters and Treasury.
Aug-10
85
Sep-11
US employment during recessions
100
Index
Index
June 1990
99
100
99
March 1980
98
98
February 2001
97
97
July 1974
July 1981
96
96
95
95
94
94
January 2008 (current)
93
93
0
4
8
12
16
20
24
28
32
Months since peak in payroll employment
Source: US Bureau of Labor Statistics, Thomson Reuters and Treasury.
36
40
44
48
European sovereign yields spreads
3600 Basis points
Basis points 3600
3000
3000
2400
2400
Greece
Italy
Spain
1800
1800
Ireland
Portugal
UK
1200
1200
600
0
Jan-08
Source: Thomson Reuters.
600
Dec-08
Dec-09
Nov-10
0
Nov-11
‘The widening crisis in the euro area should
nevertheless serve as a cautionary tale for the
United States and Japan, as well as other
countries with high debts and deficits.’
IMF Fiscal Monitor – September 2011