The “sorry” state of the Australian economy in two charts

According to this report in the WSJ, “Australian Dollar’s Tumble Brings Some Relief”:

The Australian dollar’s tumble to a seven-month low is likely to be quietly welcomed by country’s central bank, which had been running short of ideas about how to rev up the flagging economy.

Don´t all non-Australians wish their own economy were “flagging” just like Australia´s?

The two charts illustrate.

The Australian dollar dances according to the music set by commodity prices. A notable exception is the period from mid-2011 to mid-2013 when, while commodity prices dropped the A$ stayed put.

Aussie two step

As you can see from the NGDP & Trend chart, that´s exactly the period during which monetary policy was tightened to bring spending back to trend. When that happened exchange rates and commodity prices resumed their “cheek-to-cheek”!

One thought on “The “sorry” state of the Australian economy in two charts

  1. According to most reports and studies, Australia is still supposed to have one of the most stable economies in the world. Are we just being extremely cautious about what might go wrong, or is the world being blind to Australia’s economic problems?

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