Charts: Australian Economy9 May, 2012, 9:25. Posted by Zarathustra
I briefly mentioned Australia some days ago as there are increasingly people calling it a bubble.
Here are just a few more charts on the Australian economy, without many comments.
1. Sectoral Balance
By definition, GDP can be defined as the sum of consumption, investment, government expenditure and net export.
On the other side, GDP can also be thought of as consumption, saving and taxation. With some algebraic manipulation, the following must hold:
(S – I) + (T – G) = (X – M)
Private Sector NET saving + Government Saving = Current Account Balance
The chart below shows an attempt to chart the sectorol balance of the Australian economy. As some of the time series as charted are a derivation of many other time series data, I am still having doubts if this is an exactly right picture, so feel free to shout at me if you think this chart is wrong. And for presentational purposes, the trade balance is shown upside down.
Source: Australian Bureau of Statistics
And for your information, this is how this chart would look like for the United States.
Here, by saving, this is not a stock concept where you are referring to how much money you have in your saving account. Rather, this is a flow concept, describing how much of disposable income is not spent as consumption. In the chart below, which is closely related to the sectoral balance, this shows the savings by sector as a percentage of GDP.
While the external sector is missing here, one can say that the government budget balance tends to move in opposite directions with the balances of the other sectors, which is also apparent in the sectoral balance chart (the important difference is that the private sector saving in the sectoral balance chart has netted out investment). One might, as a result, wonder if this is a right time for the government to tighten fiscal policy, particularly when it is now apparently that a deleveraging is going to happen after a period of accumulation of debt, as one can see below.
Finally, the Australian banking sector as a percentage of GDP. The size of the banking sector looks big, and it is clear that credit growth to commercial sector has slowed very significantly after the Lehman’s collapse, and the lack of credit growth of commercial loans has been offset by strong growth in loans to the residential sector, presumably mortgages and the likes.
Source: Reserve Bank of Australia
4. Household debt
Of course, a related chart is the total household liabilities as shown previously.
Source: ABS, FRED