ANZ Group Holdings Limited · ASX:ANZ
ANZ — Economic Australia July 2008
33 slides from ANZ's investor presentation, August 2008
Slide 1: Australia Economics update
Australia Economics update Australia and New Zealand Banking Group Limited August 2008 1
Slide 2: Global growth is slowing to the weakest in 5 years
Global growth is slowing to the weakest in 5 years.......but keep it in perspective Global economic growth 9 Real % change from year earlier 8 World G7 7 Emerging Economies 6 5 4 3 2 1 0 -1 70 75 80 85 90 95 00 05 10 Note: GDP is measured in US$ at purchasing power parities Sources: IMF and Economic
Slide 3: Developing Asian growth will remain strong even as developed country growth slows
Developing Asian growth will remain strong even as developed country growth slows – US not (yet) in recession 2007 2008 2009 2010 United states 2.2 0.7 0.8 2.3 Eurozone 2.7 1.8 1.4 2.2 United Kingdom 3.1 1.5 1.2 2.4 Japan 2.0 1.3 1.0 2.0 China 11.6 9.9 9.3 9.9 East Asia ex Japan & 5.9 4.8 4.3 5.4 Ch
Slide 4: Australian growth will also cool through 2008
Australian growth will also cool through 2008 as policy makers engineer a slowdown 8 % change 7 6 Domestic Demand 5 4 3 2 GDP (annual) GDP (quarterly) 1 0 02 03 04 05 06 07 08 09 Source: Australian Bureau of Statistics 4
Slide 5: Economic momentum slowing from higher interest rates, petrol prices and drop in confidence
Economic momentum slowing from higher interest rates, petrol prices and drop in confidence Retail sales and consumer sentiment Real Gross State Product 1.0 % change (trend) 140 8 % retail sales monthly % change 130 120 7 2006-07 (e) 0.5 110 2007-08 (f) 100 6 2008-09 consumer confidence 90 5 annualis
Slide 6: Global inflation has spiked in 2008 to the highest since 1999
Global inflation has spiked in 2008 to the highest since 1999 …and developed countries highest since 1991! Global inflation 9 % change from year earlier 8 7 6 Total World 5.3% 5 4 Developed Economies 3.5% 3 2 1 0 90 94 98 02 06 Note: Inflation is GDP weighted Sources: IMF and Economics @ ANZ 6
Slide 7: Fuelled in part by higher resources and food prices
Fuelled in part by higher resources and food prices Hard commodity prices Soft commodity prices 350 US$/tonne US US 550 20 300 500 18 Sugar (USc/lb Coking coal RHS) 16 450 250 Beef (USc/kg 14 400 LHS) 200 12 350 10 Steaming coal 150 300 8 250 100 6 200 4 50 150 2 Iron ore Wheat (US$/tn LHS) 0 100 0
Slide 8: In Australia core inflation is at decade highs
In Australia core inflation is at decade highs and much of it is home grown Core inflation Tradeables and non-tradeables 5 annual % change 6.0 annual % change 5.0 Non tradeables 4 4.0 3 Target 3.0 Tradeables band 2 2.0 1.0 1 0.0 0 -1.0 97 99 01 03 05 07 02 03 04 05 06 07 Source: Australian Bureau of
Slide 9: Global equity markets are still taking a hammering
Global equity markets are still taking a hammering and Australia has not been immune International equity market comparisons 120 Index, 2 April=100 115 110 Australia 105 USA 100 95 90 UK 85 80 75 70 Japan 65 2-Apr 14- 25- 6-Aug 17- 29- 10- 21- 3-Mar 14- 26- 7-Jul May Jun Sep Oct Dec Jan Apr May Sour
Slide 10: Australia's housing market has also softened
Australia’s housing market has also softened, but is unlikely to become as dire as US House prices Population growth 2.0 % change from year earlier 20 Australia Australia 15 1.5 10 5 1.0 0 US -5 0.5 -10 US -15 0.0 -20 % change from year earlier 01 02 03 04 05 06 07 08 01 02 03 04 05 06 07 08 Housing
Slide 11: House prices in Australia have never fallen nationally in recent history
House prices in Australia have never fallen nationally in recent history, even during the recession of 1990/91… 40 % change pa Existing house price growth 35 30 25 20 15 10 5 0 68 71 74 77 80 83 86 89 92 95 98 01 04 07 -5 Source: Australian Bureau of Statistics 11
Slide 12: Individual markets have at times gone south with Sydney the most recent example
…although individual markets have at times gone south with Sydney the most recent example Existing house prices 550 $'000 Sydney 500 450 Perth Darwin 400 Canberra 350 Melbourne Adelaide 300 Brisbane 250 200 Hobart 150 100 02 03 04 05 06 07 Sources: Australian Bureau of Statistics and Economics@ANZ 1
Slide 13: Global cash rate moves have been desynchronised
Global cash rate moves have been desynchronised 9 % Global cash rates UK NZ 6 Australia 3 USA Europe Japan 0 97 98 99 00 01 02 03 04 05 06 07 08 09 Sources: Bloomberg and Economics @ ANZ 13
Slide 14: Third oil price shock - record price highs
Third oil price shock - record price highs for global oil and Australian petrol 160 US$bbl Global oil and Australian petrol prices Ac litre 180 140 160 120 Aust Petrol (RHS) 140 100 80 120 60 100 Crude (LHS) 40 80 20 0 60 86 90 94 98 02 06 Sources: BP Review and Economics @ ANZ 14
Slide 15: Third oil price shock – more protracted and demand driven
Third oil price shock – more protracted rather than short and sharp and demand rather than supply driven 200 Ann % ch Global oil price 150 100 50 0 -50 -100 70 74 78 82 86 90 94 98 02 06 10 Sources: BP Review and Economics @ ANZ 15
Slide 16: Proven oil reserves may be plateauing
“Proven” oil reserves may be plateauing – and most reserves are in OPEC hands – although production expected to keep rising for now, so globally not yet at “peak oil” 90 Mn barrels a day 1400 Thousand million barrels World oil production World Reserves 85 1200 1000 80 Total Reserves 800 75 OPEC Rese
Slide 17: US still biggest oil consumer – China driving demand growth
US still biggest oil consumer – but it is the growth of China which is driving the big increase in demand Consumption of oil 30 % global consumption 25 USA 20 15 China 10 5 0 90 95 00 05 10 Sources: BP World Energy Review 17
Slide 18: Fuel prices in Australia are low relative to most other developed economies
Fuel prices in Australia are low relative to most other developed economies Chile India Russia oil price controls Indonesia China and/or subsidies Egypt Iran Venezuela Netherlands Belgium Denmark Germany Britain Iceland Italy Norway France Luxembourg Ireland Greece Singapore New Zealand Australia Ca
Slide 19: Impacts of higher fuel costs
Impacts of higher fuel costs • For households, fuel is a smaller component of spending than commonly believed at under 3% total household spending. • Nevertheless, if petrol price increases were at the expense of other retail spending, then each 10c increase would reduce retail spending by 0.5%. • A
Slide 20: Australian self sufficiency in oil is rapidly eroding
Australian self sufficiency in oil is rapidly eroding leaving us more exposed to global oil markets Australian oil 1000 000s bbls day 900 800 Consumption 700 600 500 400 Production 300 200 100 0 70 75 80 85 90 95 00 05 Sources: ABARE and BP Statistical Review 20
Slide 21: Oil shortages – Are biofuels the answer?
Oil shortages – Are biofuels the answer? • First generation biofuels essentially use food – grains and sugar and vegetable oils – to make synthetic petrol and diesel • World Bank reports that biofuels have increased global food prices by up to 75% since 2002. More than a third of US corn now used fo
Slide 22: Climate Change – Adapt or Perish!
Climate Change – Adapt or Perish! First Garnaut – and now the Carbon Pollution Reduction Scheme Green Paper z Reducing carbon emissions means reducing use of carbon releasing fossil fuels like oil, gas and coal, and also reducing clearing of carbon sequestering trees z The primary mechanism for redu
Slide 23: Climate change – Australia is one of the world's biggest carbon emitters per capita
Climate change – Australia is one of the world’s biggest carbon emitters per capita Greenhouse Gas Emissions per capita 30 Carbon dioxide equivalents Mt pa 25 20 15 10 5 0 Australia USA EU UK Japan China India World Source: Stern Review 23
Slide 24: Climate change – Power generation is Australia's biggest greenhouse gas emitter
Climate change – Power generation is Australia’s biggest greenhouse gas emitter Australia’s Greenhouse Gas Emissions 2006 350 Carbon dioxide equivalents Mt pa 300 250 200 150 100 50 0 Electricity Industry Agriculture Methane Land use Transport Fugitive from Emissions landfill Source: Department of C
Slide 25: Climate Change – See the opportunities, not the costs
Climate Change – See the opportunities, not the costs Massive investment required in • Water saving infrastructure • Low carbon fuels “clean coal” • Energy saving technology for households and business • Alternative energy (wind, thermal, hydro, solar) • Forestry and other carbon sequestration • Man
Slide 26: Australia – Still the lucky country despite the challenges ahead
Australia – Still the lucky country despite the challenges ahead • Although global growth is slowing, the international environment relevant to Australia will remain buoyant • Further massive rises in commodity prices will boost income flows into Australia • Australia has moved early to combat infla
Slide 27: Credit growth slowing sharply across all sectors
Credit growth slowing sharply across all sectors Housing credit Personal credit 25 % change from year earlier 20 % change from year earlier 20 15 15 10 10 5 5 0 0 00 01 02 03 04 05 06 07 08 00 01 02 03 04 05 06 07 08 Business credit Total credit 25 % change from year earlier 20 % change from year ea
Slide 28: Asian growth rates ex Japan have slowed but remain generally robust
Asian growth rates ex Japan have slowed but remain generally robust Asian economic growth 14 % pa 12 China 10 India 8 Vietnam 6 Korea 4 2 Japan 0 00 01 02 03 04 05 06 07 08 -2 -4 Source: Thompson Financial Datastream. 28
Slide 29: Asian inflation has increased sharply
Asian inflation has increased sharply 25 % pa 20 Vietnam 15 China 10 India 5 Korea Japan 0 00 01 02 03 04 05 06 07 08 -5 Source: Thompson Financial Datastream. 29
Slide 30: Emerging Asia is not particularly vulnerable to the liquidity crunch
Emerging Asia is not particularly vulnerable to the liquidity crunch Current account surplus, 2006 12 % of GDP 10 8 6 4 2 0 -2 -4 -6 -8 -10 N US Australia Korea Indonesia Japan S'pore Indonesia Taiwan China Zealand Source: Datastream; CEIC; Economics@ANZ 30
Slide 31: Asia's high level of reserves provides stability in volatile times
Asia’s high level of reserves provides stability in volatile times Foreign exchange reserves 1600 US$bn China 1400 1200 1000 Japan 800 600 Russia 400 Korea Taiwan 200 India 0 90 93 96 99 02 05 08 Source: IMF International Financial Statistics. 31
Slide 32: Disclaimer
Disclaimer Important Notice UNITED STATES OF AMERICA by: Australia and New Zealand Banking Group Limited is represented in: ANZ Securities, Inc. (Member of NASD and SIPC) 6th Floor 1177 Avenue of the Americas AUSTRALIA by: New York, NY 10036, United States of America Australia and New Zealand Bankin
Slide 33: www.anz.com
The material in this presentation is general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and