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【Mike Nahan Column】2009: A Year Of Good Fortune

时间:2009-12-11 13:13:31来源: 作者: 点击:
Mike Nahan Column. Keep updated fortnightly.

2009 will be a year to remember. Unlike many other places in the world, we in Western Australia avoided the global financial crisis. Sure, economic growth slowed in many sectors, people lost jobs and many people lost money in the equity markets. But it could have been far, far worse. Just take peep at Ireland, formerly the economic tiger of Europe. Its economy has so far declined by 12 per cent during 2009.
Australia was virtually the only developed economy to come through the GFC without dipping into recession. And WA once again performed better than the other states.

In my role as a politician with a strong economic background, our good fortune surprised me and it also surprised many of our economists. Past history had shown that when the wealthy world caught a severe bout of economic flu, Australia would catch it, if anything a worse dose than the rest.  But we avoided the GFC for one reason – China.
The driving sector of the Australia economy – the resources sector – has become decoupled from the wealthy western world and locked into Asia. This transformation has been underway for some decades but it is now complete.
Virtually all our resources are now destined for Asia, but it is China that has become to dominate, particularly over the last year.
At the beginning of the year, even the Chinese economy was shaky. Growth was slowing rapidly, exports were declining sharply and unemployment was growing. The GFC was undermining China’s export markets on which it was highly dependent.
The question was whether or not China could re-orientate its economy from export focus to domestic consumption. It had the funds, the need and political capacity, but few export oriented countries had ever been able to do it. 
But China did. It undertook a massive fiscal stimulus, one of the largest of any government, focused on capital spending. And unlike most other countries, China’s stimulus was spent quickly.
This stimulus not only reinvigorated the Chinese economy but led to a large increase in demand for Western Australian resources. Indeed, the Chinese stimulus is the main reason the Australian economy avoided a recession. The Rudd Government’s stimulus played a very minor role.
As such, 2009 was the year when we truly hitched our wagon to China and it paid off beautifully. It has made it a year to remember and 2010 is on track to be yet another memorable year.

 

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