{"id":39274,"date":"2018-05-14T06:00:53","date_gmt":"2018-05-13T20:00:53","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=39274"},"modified":"2018-05-11T17:17:51","modified_gmt":"2018-05-11T07:17:51","slug":"the-annual-geoeconomic-statement","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/the-annual-geoeconomic-statement\/","title":{"rendered":"The annual geoeconomic statement"},"content":{"rendered":"
<\/figure>\n

Australian defence<\/a> white<\/a> papers<\/a> come along occasionally and foreign policy papers<\/a> are rare, but each year Canberra produces a geoeconomic report card.<\/p>\n

Although the federal budget is an intensely domestic creature, the Treasury documents always offer a snapshot of global wealth and power.<\/p>\n

The strengths and culture of the Treasury department\u2014plus the series of budget statements and papers\u2014give the geoeconomic commentary a permanent place. Treasury owns the right and uses it. Governments, prime ministers and treasurers come and go. Treasury endures, guarding and wielding its annual right to pronounce on the domestic and global economy.<\/p>\n

Despite its dour image, Treasury\u2019s geoeconomic ideology is liberal internationalist with an optimistic faith in free trade and globalisation.<\/p>\n

Australia\u2019s 2016 Defence White Paper and the 2017 Foreign Policy White Paper were rendered in dark colours. The contrasting Treasury view is brighter. In Treasury world, the\u00a0US is great and China is wonderful.<\/p>\n

The geoeconomic report card on the outlook for the international economy<\/a> is always in Statement\u00a02 of Budget Paper No.\u00a01. Australia enters its 27th consecutive year of economic growth. The domestic good times have rolled so long they\u2019re the norm, part of the national expectation. Yet nearly three decades without a recession is a record for Oz that reaches towards a world record.<\/p>\n

With 2.\u00be%\u00a0growth this financial year (2017\u201318), Treasury predicts 3%\u00a0for the next two financial years, helped along by the international upswing: \u2018Global growth has risen to its fastest pace in six years, with widespread strength across both advanced and emerging economies … Overall, the global cycle is better synchronised than it has been for some time.\u2019<\/p>\n

When I started jumping into Statement\u00a02 back in the mid-1970s, the Treasury geoeconomic hierarchy had the\u00a0US firmly on top. Today there\u2019s a lot more jostling. Through the 1980s and 90s, Japan came close to sharing the top spot with the\u00a0US.<\/p>\n

Then the China express roared into Oz. In the first decade of this century, Treasury embraced purchasing power parity<\/a> (PPP) in preference to the US$ exchange rate beloved by American firsters. The purpose was to emphasise China\u2019s arrival in second spot, overtaking Japan. By 2006, Treasury was using\u00a0PPP<\/a> to rank China as the second largest economy and India the fourth largest, to dramatise far-reaching changes in global power.<\/p>\n

In this decade, Treasury hasn\u2019t been mentioning the purchasing power measure, perhaps because PPP\u00a0says China overtook the\u00a0US<\/a> to become the world\u2019s top economy in\u00a02014. No need to rub it in. And for much of this decade, the Treasury geoeconomic discussion has started with China anyway.<\/p>\n

This year, though, the hierarchy used in Statement\u00a02 was the\u00a0US, China, India and Japan:<\/p>\n

United States: <\/strong>\u2018Strong growth\u2019 with unemployment at\u00a04%, \u2018around multi-decade lows\u2019. Donald Trump got his tax cuts. Increased demand and capacity constraints spell more US\u00a0imports and inflationary pressure. Fiscal stimulus (let \u2019er rip, says The Donald) pushes against Fed Reserve monetary tightening, \u2018heightening the downside risks\u2019. The danger of a Trump tariff\/trade war escalating causes \u2018uncertainties for both the\u00a0US and global outlook\u2019.<\/p>\n

China<\/strong>: Experienced stronger than expected growth in\u00a02017, driven by robust consumption and a pick-up in exports. Despite the good near\u2011term outlook, growth in China is expected to moderate over time below the current annual target of\u00a06.5%. China wants to rein in risk in the financial system, deal with industrial overcapacity and clean up its environment. The Treasury conclusion is that Beijing must manage the transition to \u2018quality growth\u2019 while facing \u2018geopolitical tensions\u2019.<\/p>\n

India<\/strong>: On the rebound after a disrupted\u00a02017, India is forecast to reclaim its title as the \u2018world\u2019s fastest growing major economy\u2019 in\u00a02018. The Treasury conclusion: \u2018External factors such as higher oil prices and rising protectionism present risks to India\u2019s economic growth.\u2019<\/p>\n

Japan<\/strong>: Eight consecutive increases in quarterly GDP represent \u2018the longest run of growth in almost 30\u00a0years\u2019. Unemployment is close to its lowest since the\u00a01990s. Still, demography is destiny: \u2018In the longer term, Japan\u2019s demographic challenges remain substantial.\u2019<\/p>\n

Over the past five years, Treasury has changed the emphasis of its reporting on what it still quaintly describes as \u2018Other East Asia\u2019. More focus is given to the \u2018ASEAN-5\u2019, comprising Indonesia, Malaysia, the Philippines, Thailand and Vietnam. This has delighted half of ASEAN, while miffing some others of the Other, especially South Korea and Taiwan.<\/p>\n

Skipping past the Treasury paragraph on \u2018the euro area\u2019 and Brexit, Southeast Asia now gets its own treatment as an important element of the geoeconomic ecology.<\/p>\n

ASEAN\u20115<\/strong>: Broad-based growth will continue. More trade\u2011exposed economies (particularly Vietnam, Malaysia and Thailand) have benefited from the global pick\u2011up in global trade, given their significance in global supply chains. The Philippines is also on the up. Treasury summation:<\/p>\n

As globally integrated economies with large trade exposures, these economies are particularly susceptible to the risk of rising protectionism as well as moderating growth in the Chinese economy and the pace of monetary policy normalisation in the\u00a0US.<\/p><\/blockquote>\n

Treasury often mounts the soapbox for a mini lecture. Last year\u2019s lecture was on global trade growth<\/a>, 2016\u00a0was economic transitions in China and Australia<\/a>, and 2015\u00a0was India\u2019s growing potential as a partner<\/a>. This year it\u2019s the importance of trade to the global economy. The name \u2018Trump\u2019 doesn\u2019t appear in the mini muse moment, but it\u2019s all about Donald:<\/p>\n

The increasing integration between countries means that significant changes to trade policies in one country, especially a large and globally integrated country, are likely to affect many other economies around the world. This increases the uncertainty around the effects of any rise in trade protectionism.<\/p><\/blockquote>\n

Even Treasury is a little Trump-ed.<\/p>\n","protected":false},"excerpt":{"rendered":"

Australian defence white papers come along occasionally and foreign policy papers are rare, but each year Canberra produces a geoeconomic report card. Although the federal budget is an intensely domestic creature, the Treasury documents always …<\/p>\n","protected":false},"author":79,"featured_media":39277,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[143,52,433,31],"class_list":["post-39274","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-asia-pacific","tag-china","tag-economics","tag-united-states"],"acf":[],"yoast_head":"\nThe annual geoeconomic statement | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aspistrategist.ru\/the-annual-geoeconomic-statement\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The annual geoeconomic statement | The Strategist\" \/>\n<meta property=\"og:description\" content=\"Australian defence white papers come along occasionally and foreign policy papers are rare, but each year Canberra produces a geoeconomic report card. 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