Recently there have been a few articles looking back at macro trends. One mentioned the
BRIC concept. The other, allied, was the
rise of the middle class and the impact on demand/ consumption. No-one talks about the now discredited, or at least atomised, BRICs as a force any more. And Covid with attendant disruptions have set back the advancement of significant numbers around the world to achieving a higher standard of living. The European
war, with Russia making inroads into independent Ukraine, has had further impacts on energy costs and food supplies. And
globalisation is also an idea that flowed but is now ebbing, as supply chains undergo stress and strategic alliances reconsider what may or may not be such a good idea, after all.
But we still could have a billion people moving to middle class (defined as a US$5000
per capita income level) in the next decade. It is around this point where a transition occurs, be it to acquire a refrigerator, a vehicle, aircon or other goods, and a move away from subsistence and other pressing issues. I remember about 2005 it was all about China; and we have seen what it has achieved with the 8%pa growth for a decade or more. And how Australia benefited from resources boom marks 1 and 2. (blurred boundaries because the GFC intruded but the response kicked in even stronger growth).
So thanks,
gg, for kick-starting a revisit. Clearly the notion of Australia benefiting from global demand is still there. Our very reality of an island continent provides a level of security even though logistically we can be quite removed from markets. A few points
- Dry-land wide acreage agriculture. Tick. We are food exporters.
- Commodities. On the plus side, a range of minerals, both the 'old' such as iron ore and coal, and the new, or 'forward facing', that will be involved in decarbonisation. On the other side, energy is a mixed bag; as importers of oil though with large LNG exports
- We don't do upstream processing well. A high cost country, with a small labour force and little history of succeeding
- Still a net importer of capital (and on that point, slotting in Europe / UK as Weak ignores their importance in the global financing chain). But it's getting better, our Superannuation and Future Funds are enabling global investment.
- Rule of law. Educated. Open to migration flows, both ways.
So, where to, now? Best thing I did in 2005 when the embryonic resources boom was kicking off, was to buy MND for a buck. Pity I missed FMG.