Looks like Australia has achieved what Singapore has been trying to do. The elusive Swiss standard of living.
http://www.smh.com.au/business/australian-dollar-dearest-of-top-economies-20121022-281jh.html
http://www.smh.com.au/business/australian-dollar-dearest-of-top-economies-20121022-281jh.html
Australian dollar dearest of top economies
Date
October 23, 2012
39 reading nowComments 248 Read later
Tim Colebatch
Tim Colebatch is The Age's economic editor.
View more articles from Tim Colebatch
inShare
Pin ItEmail articlePrintReprints & permissions
AUSTRALIA has the third most expensive currency in the world, and the most expensive of the world's 20 largest economies, International Monetary Fund estimates reveal.
The IMF's database shows goods and services costing $US100 ($A97) to produce in the US now cost $US41 to produce in India, $US67 in China, $US105 in Germany or Britain - but $US161 in Australia.
Only Norway and Switzerland are more expensive to do business, or spend money in. Since 2002, the dollar has turned Australia from a relatively low-wage, low-cost country to a high-income, high-cost one outpacing even Japan.
The IMF publishes two measures of countries' GDP. One measures nominal output, using exchange rates to convert each country's output into US dollars, while the other measures real output, (purchasing power parity or PPP), by also comparing prices, updated from a benchmark study in the mid-2000s headed by Australia's former statistician, Dennis Trewin.
Advertisement
If you pay $15 in Australia to see a film that costs $1 to see in India, the nominal measure counts the Australian viewing as 15 times more valuable than the Indian one. The real measure gives both the same value.
Australia's relative prices have soared from a decade ago, when goods and services that cost $100 to produce in the US could be produced here for $73. Most of that rise is due to the rising dollar. And some reflects wages and prices rising more here than in other countries.
The high dollar has been great for Australian consumers - it allows us to take overseas holidays or buy imported goods cheaper.
It has allowed Treasurer Wayne Swan to skite that Australia is the world's 12th biggest economy. But real output can be compared only by adjusting for price levels. And on the PPP measure, over 10 years, Australia slid from 15th to 18th, between Iran and Taiwan.
The same rising dollar that makes us wealthier as consumers makes us poorer as producers. It has seen a sharp deterioration in the competitiveness of Australian producers selling in global markets.
Some countries hold down their currencies.
The IMF says Taiwan now almost equals Australia in output and GDP per head. But its currency has been held down to a third of our dollar's value, to keep its manufacturing competitive with China.
Read more: http://www.smh.com.au/business/aust...p-economies-20121022-281jh.html#ixzz2A5qDBIgN