Growth numbers for the 4th quarter have just been published for Australia. They are strong as on average 2012 GDP growth is 3.6%.
But that’s not what seems to me important at this moment. I had in mind what Glenn Stevens the governor of the Australian Central Bank says regularly at the exit of the Monetary Policy Committee. He says that Australian outlook is more dependent on Asia than on the western industrialized countries.
To look carefully at this point I took a simple measure of the business cycle. On the chart I measured five year growth rate for Australia at annual rate. I took the same measure for the USA.
We see that until the beginning of the 2000’s business cycles in Australia and in the USA were following the same tempo. The USA was in advance and there was a large gap at the beginning of the 70’s probably due to commodity high prices.
But since the beginning of the 2000’s there is a divergence between the two cycle. At the end of 2012, US growth was only 0.5% on average during each of the last five years. For Australia, this growth number was 2.5%.
Australian economy doesn’t seem to be as dependent as it was on the US economy momentum. This probably shows that the determinant of Australian business cycle have changed and as the most robust growth region during the last 10 years has been Asia we can interfere that Australia has probably moved from the US influence to integrate Asia area.
This can illustrate what Glenn Stevens says recurrently.
This chart illustrates the de-synchronization of the global business cycle and the search for a new equilibrium that will not be conditioned uniquely by the USA. It’s a complicated exercise and it is not surprising that a real global recovery is not easy to find.