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MFAA Prosper : Mortgage and Finance Brief 06
begins to run out of steam, India will be nearing the sweet spot for urbanisation and demog raphics. Don’t let mining investment blind you to other growth areas The media chatter in regards to the boom has been on the coming resources investment. This is understandable, particularly given the outlook for a 50% increase in mining investment in 2011 and the fact that a number of RBA officials have consistently pointed out that the coming investment surge is a key reason why rates are set to go higher. But mining/infrastructure investment is not the only way that record high commodity prices stimulate economic g rowth. The other way is via the boost to income associated with rising commodity prices. This effect is further enhanced by China driving down the cost of the many goods we import. The rise in the value of our exports, compared to the value of our imports, boost our terms of trade thus lifting our income relative to the rest of the world. So even if we did not open one new mine or export an extra tonne of coal, national income would rise and overall growth would accelerate. To give you some idea of the mag nitude of this income effect, Australia’s trade position swung from a $1.5 billion deficit to a surplus of around $3.6 billion in just three months. And we have seen mining profits lift around 70% over the same period of time without a significant lift in mining output. This is why the RBA argues that Australia is not a simple two-speed economy where resource-rich regions grow fast, leaving everyone else behind. The diversity in regional responses to a shock may not be as great as first thought. Spillovers, policy ‘automatic stabilisers’ of taxation and government expenditure and labour/capital mobility means the effects of the current resources boom, “even if concentrated initially, will tend to be felt more generally across the economy over time”. (Glenn Stevens, June 2010.) If you want to define this multi-speed economy, it may be better to ask where the burden of managing the boom will fall The RBA has made it clear it is Matthew Pavlich Think differently. Think Homeloans. Homeloans has 25 years of experience at providing brokers and their clients with a refreshing alternative to the banks. • Competitive and simple commission structure • Comprehensive range of products and credit policies • Faster turnaround times and electronic application process • Customer benefits program with ongoing discounts on a range of goods and services • No channel conflict Accredited brokers can visit our broker portal at homeloans.com.au/loanzone To find your local Homeloans BDM call 1300 78 78 66. Terms, conditions and lending criteria apply. Lending policy, interest rates and fees are subject to change. Homeloans Limited ABN 55 095 034 003. AFSL 247829. Mortgage + Finance - Vertical.in1 1 10/28/2010 9:00:32 AM News Sources: ABS, St George Economics NEW PERSONS TO ADDITIONAL DWELLINGS 8 7 6 5 4 3 2 1 0 -1 -2 1900 1940 1980 1920 1960 2000 Number WW1 WW1I Great Depression Australia wide, we have built significantly less homes for our rising intake of migrants.
Mortgage and Finance Brief 05
Mortgage and Finance Brief 07