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Winning Australia | Building recoveries on Resources and Capital Expenditure

The economic strength of resources and basic industries

The world over, incipient recoveries were witnessed first in resource based economies and based on higher consumer inflation. Such resource based sectors and infrastructure and heavy industries like Oil, power, energy, roads, transport, mining and steel witnessed a global rebound which has to be sustained and transferred to other sectors through real economic channeling of profits. Rio Tinto, Petrobras and others have shown the way from Latam to Russia, and while Russia underlines the weaknesses in an inherently resource based economy, led by stronger corruption and state currency weaknesses from overleveraging of the state, others like China and Australia have responded with much strength.

Australian Currency

Globally the basic metals and mining industries have ridden the economic rebound and a key player has been Australia which accounts for 1/3rd of the global commodities trade most of it with counterpart China. Economic one up man ship in the sector is also correspondingly a higher decibel but Mining alone has been paying for all of economic hardships, and now as the Australian currency recovers from the bout of sudden appreciation in 2009 and slides back to parity with the US Dollar, it and the Asian superpowers have to harness the mining and energy sectors with the appropriate expertise and without stepping into the obvious economic pitfalls. Elections in 2010 further skew the ask for the Pacific Planet of fun and steel, especially as it remains tied to international trade and with very few partners.

Even in India over INR 6.5 Trillion or $138 bn in projects have been shown as completed from April 2010 ( mint report of date) with power alone seeing commissioning of INR 1.75 trillion in projects or $37.23 billion. In Steel, the state of Karnataka alone has recd proposals for over 30 million MT in steel and integrated townships, while a mid cap promoter like JSW steel is expanding his 10million MT steel empire to 32 million MT in the next few years.

Australia’s Economic Freshness | Advantage zyaada

Australia remains a resource based economy, but led recovery and the relevant bailout exit across the globe in order to better its investment climate as seen by foreign investors. While GDP did not respond as expected and a Mining Super tax also failed to take it into a recessionary dip, the economy has been moving from strength to strength avoiding economic bankruptcy and the rising retirement costs facing that economy like any other. In the meantime, Asian partners of Australia have been exchaging trade with Australia accounting for almost all the 33% Global Commodity / Mining trade that bases itself in Asia. Relations with China have been strained and Indian companies have been eyeing prized projects in Coal in Australia with Coal India and Now Adani looking for acquisitions on that planet. Adani has offered $1 billion or INR 4700 Crores for Linc Energy coal tenements in Queensland

However, Services determine more than 2/3rd of the Australian GDP and it has come a long way in determining its way forward, building depth in the local exchanges and spawning a few hollywood stars including Mel Gibson and Nicole Kidman and a few economic heavyweights from its little corner of the table. Property and Business Services alone are 15% of their GDP and consequently an overt focus has been placed on documentation and regulation in the financial sector and in business reporting[wikipedia]. With a population of 22 million and $37,200 in per capita income[economy watch], it is a little rosy eyed about the future.

Australia’s resolute tiredness with pacts

Australians, much like in Cricket , Olympics and the Commonwealth Games, approach international trade with suspicion and abrupt bull headed trivial journeys which has much been their hall mark from protectionist trade, to mining super taxes paying retirement benefits led bankruptcy and an isolated tax and accounting system which does not allow WFOEs ( Wholly Foreign Owned Enterprises) to function on its planet. Australians have also frequently answered charges of racism as ‘nothing much’ and paid with BHP Billton employees put up in Chinese prisons for corporate spying in a seeming retaliation to Australia’s inability to bend

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This entry was posted on August 2, 2010 by in Amitonomics, Brazil, China, Emerging Markets, Financial Markets, Home and away, India and tagged , , .

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