by Kodjo Adadevoh

Created on: April 17, 2010   Last Updated: March 26, 2012

By virtue of its positive Gross Domestic Product (GDP) growth in 2009, Australia came in third amongst the developed nations by posting a GDP growth rate of 2.7%. China and India experienced 8.7% and 6.5% GDP growth respectively in 2009 and Brazil managed to pull in a 0.1% growth. Australia is the third largest exporting country, with China and Germany taking the first and second place. Australia is a significant exporter of commodities, hence it benefits when the economies of its major trading partners is booming.  

Australians have benefitted from a tight labor market and increasing income levels. Net worth per households increased by 11% in 2009, further solidifying the recovery in the Australian economy; the recovery has been helped by stabilization in the real estate market accompanied with an approximately 10% increases in home prices in 2009. Savings rates in Australia stand at about 4%, which is a significant improvement from prior years and credit has grown at a 6% rate. 

The Australian central bank was one of the first central banks in the western hemisphere to begin tightening their monetary policy. The central bank started tightening in October, 2009, and has raised rates five times since; reflecting their need to remove excessive liquidity. The central bank’s key lending rate is currently at 4.25% and many believe the increase in rates is moderating the recent resurgence in home sales, even though home prices continue to show strength.

Australian banks came through the recent economic downturn relatively unscathed. The quality of mortgages held by Australian banks is high by international standards; however, business loans have been more problematic and in particular commercial real estate, a sector for which the banks have experience increasing delinquencies. And at the same time, the central bankers are concerned about the possibility of the Australian economy overheating as a result of increasing commodity prices and increases in investment activity.

New Zealand’s most important trading partner is Australia. New Zealand’s exports go predominantly to the following countries in order of trade: Australia; United States; Japan, Great Britain and South Korea. Economists expect New Zealand to grow by at least 4% in 2010, as most of its trading partners recover and resume economic activity, leading to increased demand for New Zealand’s goods and services.

New Zealand’s economy is enjoying a climate of low

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