Australia still hopping

Financial Post ^ | October 11, 2009 | Alia McMullen

[myknowledge]

Australia is perhaps best-known for its beer drinkers, barbecues, crocodiles and sheilas, but don't let that fool you into underestimating the business savvy of those Aussies. The island from down under is leading the developed world in economic recovery, and investors are starting to take note.

"We're in a much better neighbourhood than Canada," Brian Redican, a senior economist at Macquarie Bank in Sydney, says of Australia's trade relationships with the developing and emerging markets of the Asia-Pacific.

Australia's trade with China has been key to keeping the economy growing, but Mr. Redican says quick economic management has also been vital in preventing recession. Australia was the only developed country to avoid the latest recession, allowing it to continue on its record run of 17 years of consecutive economic growth.

The Reserve Bank of Australia, the country's central bank, this week became the first in the Group of 20 to raise interest rates, prompted by core inflation above the target band of 2% to 3%, falling unemployment, rising stock markets, higher house prices, increased business investment and a rise in retail sales. The RBA raised rates 0.25 basis points to 3.25%.

[myknowledge]

I can imagine the board members of the Reserve Bank of Australia gather round an oak table, the RBA director discussing with everyone about an interest rate rise.

Who is voting for an interest rate rise? Raise your hands one by one.

Interest rate rise!

Interest rate rise!

Interest rate rise!

Interest rate rise!

Interest rate rise!

Interest rate rise!

Interest rate rise!

Interest rate rise!

Interest rate rise is done!

The RBA director records the rate rise in his notebook and the 0.25% rise is announced.

Homeboyers and homeowners, a rate rise is coming your way.

[melsec]

The article fails to mention the suberb economic management of the previous conservative Government as the single reason why Australia is in such a good position. The current Labor Govenment had a surplus or 40 million or so dollars to spend on the stimulus package. But of course they couldn’t be happy with just spending that they had to put us into a debt cycle that caused interest rates to rise and that the taxpayers will have to pay off.

Mel