Australia's Economy

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Economic diplomacy: Under the doona, Australian investors dump China

Departure call While Australian exporters were shocked by the pace and extent of China’s trade sanctions last year, it now appears that investors were more quietly making their own exit. Australian Bureau of Statistics (ABS) annual country data released last month shows that Australian

By Greg Earl

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Economic diplomacy: Budgeting for China and the price that matters

New chapter It may not have been intended, but a map deep inside last week’s federal budget papers seems to sum up the Australian government’s economic diplomacy strategy: preparing for life after China. While it is titled “top export destinations”, arrows zoom to all major trading

By Greg Earl

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Lowy Institute Conversations: Ross Garnaut on Restoring Australia after the Pandemic Recession

In this episode of Lowy Institute Conversations, Roland Rajah, Lowy Institute Lead Economist, sits down with Dr Ross Garnaut to discuss the ideas in his new book, Reset: Restoring Australia after the Pandemic Recession

By Roland Rajah

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Economic diplomacy: Patent politics and trade deal twists

Biden’s jab First it was new carbon emission cuts, and then a global minimum corporate tax. But it is hard to beat the Biden administration’s move to shaft the pharmaceutical industry lobby over vaccine patents for putting the US back at the heart of global public policy. The devil will be in

By Greg Earl

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Why our economy can afford to stand up to China with Belt and Road veto

Originally published in the Sydney Morning Herald.

By Roland Rajah

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Reconstruction: Australia after COVID

A discussion of what is in store economically for Australians after COVID-19, by one of Australia's leading economic voices

By John Edwards

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Covid recovery, in Australia and the world

In much of the world, Covid-19 infections continue apace, but the global economy is rapidly recovering from last year’s slump. World trade volumes and industrial production were both higher in January than they have ever been, according to data collected by the Netherlands central bank. Releasing

By John Edwards

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Economic diplomacy: Global tax, education exports and Team Australia

Tax and spend US President Joe Biden may be grabbing the global headlines by boosting world growth with his big spending and international security with his telephone diplomacy. But US Treasury Secretary Janet Yellen seems to be doing the real heavy lifting in restoring American credibility in

By Greg Earl

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The big bark but small bite of China’s trade coercion

Beginning last May, China has hit Australia with a barrage of trade sanctions in a fairly overt attempt at economic coercion. It’s still early days, but it’s worth taking stock of what the economic impact has been so far. The fact that China’s trade sanctions have taken place

By Roland Rajah

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Lowy Institute Conversations: John Edwards and Jennifer Hewett on Australia’s economy after COVID-19

In this episode of Lowy Institute Conversations, Roland Rajah, Lowy Institute lead economist, sits down with Dr John Edwards and Jennifer Hewitt to discuss Australia’s economy after COVID-19

By Roland Rajah

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What’s gone wrong with our interest rate policy?

The RBA has been forced into lockstep with a misguided US Federal Reserve held hostage by volatile financial markets. Originally published in the Australian Financial Review.

By Stephen Grenville

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Australia’s place in a decarbonising world economy

A welcome change is underway in the international effort to combat dangerous global warming. It will have big implications for the Australian economy. The United States, European Union and China – the world’s three biggest emitters – are now all targeting net zero emissions by mid-century (

By Roland Rajah

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As a national champion departs the scene, a China food fight looms

Food for thought Picking winners and sacrificing national interests are two things that conservative politicians usually like to hold out as anathema. But it says a lot about how the meltdown in relations with China is changing economic diplomacy that they are exactly what the federal

By Greg Earl

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Economic diplomacy: Federal budget hits and misses

Hide and seek It says a lot about the extent of the pandemic cash splash and the domestic politics of the federal budget that an unexpected rise in development aid spending didn’t even make the Treasurer’s speech. Aid spending will rise about 4% this year, confounding expectations that this

By Greg Earl

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COVIDcast: Joseph E. Stiglitz on global cooperation in a time of international mistrust

In this episode of COVIDcast, Lowy Institute Research Fellow Alexandre Dayant sat down with Professor Joseph E. Stiglitz to discuss the prospect of global cooperation in a time of rising populism and international mistrust.

By Alexandre Dayant

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China and the Rules‑Based Order

Seven experts debate China’s approach to the rules‑based international order

By Ben Scott, Nadège Rolland, John Culver, David Kelly

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Economic diplomacy: A snapshot of overseas investment trends

Going outOne of the big questions facing Australian companies in the new world of reshoring and diversification is how to get the balance right in a time of disruption and power shifts. The federal government and two recent independent reports have told business to invest more in Asia, against the

By Greg Earl

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Economic diplomacy: Borders, barriers and obstacles

Homeward bound While Australia’s embrace of economic sovereignty has so far involved more rhetoric than real financial resources, cash incentives for reshoring manufacturing are gathering pace in other countries. Last week’s €100 billion (A$162 billion) economic stimulus program from French

By Greg Earl

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Covid economic recovery a long-term test for Australian leadership

Although Melbourne’s secondary wave of coronavirus infection has been a significant setback, Australia’s economic recovery from the pandemic is well underway. We must now grapple, however, with the enduring aftermath of high and rising unemployment, a sharp increase in government debt, a

By John Edwards

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Economic diplomacy: Spilled milk and foreign wages

Taking one for the team Spare a thought for Japanese company Kirin, which entered Australia in the vanguard of new ambitions for Asian economic engagement but is now a victim of an undeclared trade war with China. Treasurer Josh Frydenberg’s move to prevent Kirin selling its unsuccessful Lion

By Greg Earl

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The Costs of COVID: Australia's Economic Prospects in a Wounded World

Despite a COVID-constrained global economy, rising unemployment and high government debt, meeting the fiscal challenge is within Australia's means

By John Edwards

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Australia doesn’t need to choose between guns and butter

The Morrison government’s plan for defence spending outlined in the Defence Strategic Update last month has been incorporated into the Canberra consensus, with Labor offering no criticism and the mainstream press largely supportive. Yet as the government grapples with debt and deficit as the

By Frank Yuan

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Economic diplomacy: A call to syringes, not arms

Going out or staying in With Australia experiencing its first recession in a generation, potential differences are emerging over whether future prosperity will come from more business integration with high-growth Asia or from preserving capital for economic sovereignty at home. These, of course,

By Greg Earl

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Submission to the Joint Standing Committee on Foreign Affairs, Defence and Trade Inquiry into the Implications of the COVID-19 Pandemic for Australia's Foreign Affairs, Defence and Trade

Joint submission by Lowy Institute researchers to the JSCFADT inquiry into the implications of the pandemic.

By Ben Bland, Alexandre Dayant, John Edwards, Michael Fullilove, Bonnie S Glaser, Stephen Grenville, Natasha Kassam, Lydia Khalil, Hervé Lemahieu , Richard McGregor, Shane McLeod, Annmaree O’Keeffe, Alex Oliver, Jonathan Pryke, Roland Rajah, Sam Roggeveen, Ben Scott

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Economic diplomacy: Post-Covid trade, from decoupling to wet markets

Multilateralism lives With European leaders having just spent five days in close-contact negotiations in Brussels and now Australia’s first offshore ministerial visit for almost five months to Washington, a post-Covid diplomatic agenda is tentatively taking shape. Just what Covid 19 might

By Greg Earl

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Modern Monetary Theory and mainstream economics converging

Stephen Grenville gives a detailed account in the Eureka Report on Modern Monetary Theory (MMT), which after a decade on on the periphery of economic discussion, has recently surged in popularity

By Stephen Grenville

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Economic diplomacy: Diversification dilemmas

Costing the D word Diversification might be the word of the moment in the lexicon of Australian trade debate, even though few advocates make much attempt to explain how it will actually work. But now we have two interesting efforts to quantify just how selected reductions in trade with China in

By Greg Earl

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Emerging From COVID: Policy Responses To The Pandemic

In this new feature, Lowy Institute experts provide policy recommendations for Australia to address issues that are critical to our nation’s — and the world’s — successful emergence from the pandemic

By Alex Oliver, Natasha Kassam, Richard McGregor, Roland Rajah, Ben Scott, Sam Roggeveen, Hervé Lemahieu , Stephen Grenville, Alyssa Leng, John Edwards, Ben Bland, Alexandre Dayant, Shane McLeod, Jonathan Pryke

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Emerging from COVID: Policy Responses to the Pandemic

Lowy Institute experts provide policy recommendations for Australia to address issues that are critical to our nation's — and the world's — successful emergence from the pandemic

By Ben Bland, Alexandre Dayant, John Edwards, Stephen Grenville, Natasha Kassam, Hervé Lemahieu , Richard McGregor, Shane McLeod, Alex Oliver, Jonathan Pryke, Roland Rajah, Sam Roggeveen, Ben Scott

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The World After COVID

How will the COVID-19 pandemic change the world? Lowy Institute experts provide their analysis

By Ben Bland, Michael Fullilove, Bonnie S Glaser, Stephen Grenville, Natasha Kassam, Lydia Khalil, Hervé Lemahieu , Richard McGregor, Annmaree O’Keeffe, Alex Oliver, Jonathan Pryke, Roland Rajah

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Economic diplomacy: Rising risks and missing links in a pandemic

China syndrome Former Trump administration economic adviser Kevin Hassett had a backhanded compliment for Australia amid this week’s financial market turmoil when he described it as a closely watched proxy for the Chinese economy. Complaining that Chinese data on the recovery from coronavirus

By Greg Earl

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Car manufacturing and Australia: Nothing ventured, nothing gained

Clayton Christensen’s 1997 book The Innovator’s Dilemma provides a series of compelling examples of companies ignoring or dismissing the disruptive potential of immature technologies until it’s too late, only for their upstart competitors to consign them to the dustbin of

By Nicholas Gruen

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What’s so strategic about baby-food?

The discussion about China’s bid for baby-formula supplier Bellamy’s Organic shows the usual confusion about just what should guide decisions on foreign investment in Australia. Of course there will be some proposals that are defence-strategic. But baby formula is not one of them. Nor is

By Stephen Grenville

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Economic diplomacy: China dependency and a notable departure

Switch hitting If Australia’s senior international ministers were surprised by the sharpness of US Secretary of State Mike Pompeo’s approach to economic dependence on China at the recent AUSMIN talks, they should have studied the US trade data the previous day. A great divergence

By Greg Earl

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Economic diplomacy: Japan investment gazumps China, plus election on

Investment: smaller is bigger There was a time when Asian investment in Australia was all about getting access to scarce resources and if Australia really punched above its weight in regional affairs, it was due to its lucky endowment of iron ore, coal and gas. The debate about how we best exert

By Greg Earl

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Economic diplomacy: trade ground shifts despite US-China row

Deal or no deal Global trade experts meeting in Australia this week have expressed some confidence that an interim deal will be reached by the end of the month. As markets swoon amid the latest rumours about US-China trade negotiations, global trade experts meeting in Australia&

By Greg Earl

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The Economist: a change of heart

This week’s Economist magazine features Australia on the cover with the caption: “Aussie Rules: what Australia can teach the world”. Inside, the text is effusive: Australia is “the wonder down under”, “possibly the most successful rich country”. How times (and predictions) change!

By Stephen Grenville

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Australia, Asia, and the “Wealth of Nations”

How does Australia’s economy align with those of our Asian neighbours? What are the development challenges facing nearby South East Asian countries? And just how large is China’s economy? These questions are of particular interest this week as the ASEAN-Australia Special Summit is held in Sydney

By Peter McCawley

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No urgency in cutting Australian corporate tax

Prime Minister Malcolm Turnbull returned from Washington last month even more convinced of the need for deep cuts in Australia’s 30% corporate tax rate, which is well above that in the US. Given the numbers in the Australian Senate, however, it is unlikely the proposed tax cut will pass. How

By John Edwards

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Company tax cuts: America versus Australia

The expert panel on the ABC’s Q&A program earlier this month was hopelessly confused in comparing Donald Trump’s cut in US company tax with the proposed company tax cuts in Australia. Although it’s often useful to compare domestic economic policy initiatives with those

By Stephen Grenville

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International vulnerabilities and opportunities for Australia’s universities

On Friday, news broke that the Chinese Embassy had issued a statement in Mandarin on its website urging all Chinese students in Australia to protect their safety. This was reported to have alarmed the university sector, which interpreted the statement as a veiled threat in retaliation for

By Melissa Conley Tyler

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'Message to Trump – no TPP renegotiation'

Originally published in the Nikkei Asian Review (Photo: Washington Post/Getty Images

By Stephen Grenville

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Behind the Australia–Canada ‘wine war’

Australia has formally lodged a complaint against restrictions some Canadian provinces have placed on the sale of imported wine in grocery stores, in what has been described, somewhat dramatically, as a 'wine war'. Australia's action was described in the Ottawa Sun under the headline&

By Mike Callaghan

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The ill-advised rush for Australia to strike a trade deal with Indonesia

Negotiations for the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) entered extra time this week, as negotiators agreed to add an 11th round (the 7th since leaders reactivated the initiative in March 2016) after negotiations in November failed to produce a final deal

By Matthew Busch

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Anti-migration sentiment the chief threat to openness

In Choosing Openness Andrew Leigh makes a robust, refreshed case for free trade and investment. Both are important sources of the acceleration of global output growth over the last two decades, and of Australia’s long economic expansion since 1991. But while the case for relatively free investment

By John Edwards

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Choosing Openness

Why global engagement is best for Australia

By Andrew Leigh

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Staying competitive in a global economy

This is the second in a three-part series on the future of world trade from a global (part 1), Asia Pacific (part 2) and Australian (part 3) perspective. The toughest message free marketeers have to get across is that encouraging others to open markets is not as important ensuring our economy is

By Alan Oxley

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O Canada! Australia's best hope in the global IP struggle

Intellectual property is the current focus of President Trump’s economic team. Commerce Secretary Wilbur Ross published a Financial Times op-ed ('American genius is under attack from China'; paywalled), quoting figures from the recent report of the high-level Commission on the Theft of American

By Stephen Grenville

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Is the relationship between growth and inflation shifting?

With all of the focus on interest rates, sometimes fundamental assumptions underpinning monetary policy are overlooked in the commentary. At times like this, when there are tentative but unmistakeable signs of possible change in those fundamentals, it’s worth stepping back to look at the big

By John Edwards

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Economic diplomacy brief: Corporate Australia puts its stamp on foreign policy

When the federal government embraced the concept of economic diplomacy back in 2014, the key pitch was that listening more to business would take foreign policy beyond traditional 'peace and security' to 'peace and prosperity'. With the country's peak business groups having provided submissions for

By Greg Earl

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