Searching for the Economics Holy Grail
With the evocative title “Searching for the Economics Holy Grail” the Commonwealth Bank of Australia’s Chief Economist Michael Blythe presented his annual economic overview to an audience of 80 appreciative ABIE members and CBA clients on May 31 at the Shangri-la Hotel in Paris.
Economic growth, the “Grail” and how to achieve it underpinned Michael Blythe’s talk. Citing the famous 3Ps of growth: Population, Productivity and Participation he probed the problems facing a world where all three are in decline.
“In the developed world,” he pointed out, “population growth has slowed, participation has dropped due to aging populations, and productivity has fallen. In Australia this has caused potential growth rates to fall from 3.25% to 2.75%.”
He praised the Federal Government’s just-released budget providing for a $20 billion infrastructure push, including a new Sydney airport and massive rail links. |An IMF report showed a 1% GDP lift in infrastructure spending boosted output by 1.5% after 4 years.
With the center of economic gravity pulling East, (India is now the country’s third biggest trading partner) Australia was well placed to take advantage with food, durables, education and tourism. He pointed out that education, our third biggest industry, when joined with tourism, toppled mining as Australia’s major earner. “Every time Trump sends out a tweet,” he quipped, “applications for Australian education visas go up.”
Quoting the French 19th Century French philosopher Auguste Comte “Demographics in Destiny”, he said that high migrant intakes in both Australia and the US could fuel future growth, while in France growth would remain flat. China’s would slow as the effects of it’s one-child policy was felt.
However there are warning signs: these statistics were followed by a chart showing that in the US and Europe resistance to immigration had spiked dramatically, and that the populism index was now at its highest level since the 1930’s, bringing risks of protectionism, nationalism and conflict.
The engaging presentation was followed by champagne and canapés which were throughly enjoyed by guests as they mixed and mingled.
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