Australia's luck with commodities

Comments on Tim Harcourt "Making our own luck", 22/10/2010, http://www.smh.com.au/opinion/blogs/the-airport-economist/making-our-own-luck/20101021-16vm9.html
Prediction can be a dangerous task, as the example of the visiting American executive did about the old/new economies in 2000 that Harcourt used and illustrated in his article. An outlook reasonable at the time can turn out to be far off course.


The past decade has been characterised by the huge growth of some big developing economies including China and India that pushed up demand for commodities and their prices.

Australia, with its abundant natural mineral reserves and large mining production benefited from that mining boom. As Harcourt pointed out, the terms of trade has been high. So the Aussie dollar is now at about parity with the $US.

In a sense, Australia has been lucky with the endowment of natural resources that typified the so called old economy, even though it is arguably hostage to the growth of the developing economies such as China and India.

It is surprising that Harcourt in the end also provided his own prediction for the next decade, risking the same danger that US executive had a decade ago!