Description of Graphs for Speech by I.J. Macfarlane, Governor
‘Economic Opportunities and Risks over the Coming Decades’
13 November 2003
Graph 1: Global Growth
The graph has four panels, showing Gross Domestic Product (GDP) growth for four major economic regions: English speaking countries (Australia, Canada, New Zealand, UK and US); Europe (euro-area 12); Japan; and, other east Asia. Each panel shows average annual GDP growth for the 1960s, the 1970s, the 1980s and the 1990s.
The graph shows that both Europe and Japan have witnessed a slowing in GDP growth over this period, while that in the English speaking countries and east Asia has been steadier. GDP growth in east Asia has also been consistently stronger than in other regions of the world.
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Graph 2: Global Output
The graph shows the level of GDP, indexed at 1980=100, from 1980s onwards for Australia, North America, the euro area, Japan and Other Asia. The graph shows that Other Asia has grown at a much stronger pace than the other regions over the entire period, except for a brief slowdown during the 1997/98 Asian crisis. Other Asia GDP has increased more than four-fold since 1980, the Australian economy has more than doubled, while North America, Japan and the euro area have risen a little more slowly.
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Graph 3: Global Output
The graph shows the level of GDP, indexed at 1980=100, from 1980s onwards for China, Korea, India, Japan and the United States. The graph shows that China's GDP has risen eight-fold over this period, followed by Korea which has risen by more than four-fold and India, which has risen roughly three-fold.
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Graph 4: Price of Commodities Relative to Manufactures
The graph shows an index calculated by dividing a world primary commodity price index by a world manufactured good price index. The graph shows data from 1854 to 1990.
This graph shows that the price of commodities relative to manufactures declined between 1854 and 1990 at a trend rate of about 0.3 per cent per year. There was a relatively steady decline in the price of commodities relative to manufactures over the second half of the 1800s, followed by some very large swings in relative prices over the first half of the 1900s, before they returned to decline over the second half of the 1900s, despite a sharp spike in the first half of the 1970s. The fall in relative prices was particularly sharp between the mid 1970s and mid 1980s.
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Graph 5: Terms of Trade
This graph shows Australia's terms of trade (the implicit price deflator for exports divided by the implicit price deflator for imports) from 1978 onwards. It illustrates that Australia's terms of trade has risen significantly over the past 15 years, despite some large swings during this period.
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Graph 6: US Real Share Prices
The graph shows an index of US real share prices between 1871 and 2003 on a log scale. There are also dotted lines connecting significant peaks and troughs in the series. The percentage change between these peaks and troughs is marked.
The graph illustrates that the US equity market tends to have long periods of appreciating prices, followed by still quite long periods of falling prices. In each episode shown, the real share price appreciation is greater than the subsequent decline. Between 1982 and 2000, the US experienced an asset price boom, with real share prices appreciating by 683 per cent. Since then, some of this gain has been unwound.
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