It’s taken Americans years to get over the concept that Australia is a land of aborigines and kangaroos. And it wasn’t until after WWII, when the island separated from the United Kingdom that Australia started to come into its own. Today the nation down under is the world’s 12th largest economy and has the fifth highest per capita GDP (nominal) standing at $66,984.
Australia depends greatly on its exports and with the economies of six of Australia's major trading partners falling into recessions over the last few years, the country’s economic growth has been significantly hampered. China’s surprise decision last week to devalue its currency by almost two per cent had an immediate effect on the Australian dollar, dropping it by more than one U.S. cent.
Aussie Pressure
Although China’s large currency devaluations appear to be over for the time being, the yuan is expected to continue to gradually depreciate and that will put increased pressure on the Aussie dollar. Add to this the indecision around the U.S. Federal Reserve’s upcoming interest rate hike and what you get is a situation of uncertainty and flux in the island’s currency.
Australia depends greatly on its exports… the country’s economic growth has been significantly hampered
The POBC move to stabilize the yuan has steadied the Australian dollar to some extent but concerns surrounding the impact of the devaluations on the Australian economy still exist.
In late trade on Monday the Australian dollar was buying US73.75, strengthening slightly from its US73.65 open. However, one economist at UBS expected the Aussie to depreciate further , to US70 by the end of 2015, as its weakness weighed on commodity prices and capital expenditure.
According to Richard Grace, the head of global currency forecasting at the Commonwealth Bank of Australia, selling pressure on the Australian dollar was likely to extend into next year as global growth slowed, commodity prices slid and interest-rate differentials with the US narrowed.
Close to 76 per cent of Australia’s exports are directed to Asia, and the Aussie is often used as a proxy for Asia. So “if Asian currencies were falling against the US dollar, so too would the Australian dollar,” Grace added.
With all this in mind, it is worth noting that some companies in Australia continue to thrive even in an uncertain environment.
Fast Food Companies Thrive
Take fast food for example. With all the hype in America and Europe about staying healthy and avoiding all sorts of foodstuffs that could cause havoc with our bodies, the fast food industry there has been slowing down or at the very least moving over to products that offer customers the advantage of eating out inexpensively along with some nutritional value.
Fast food in Australia however is still in its infancy and it doesn’t look like fast food companies are backtracking or changing their original focus. Instead of altering their menus to more nutritional fare, fast food companies are offering more options for making the fast food outing a more enjoyable experience.
U.S. giant, McDonalds, for example, has 750 stores around Australia. And by offering touchscreen kiosks--a world first-- customers are able to customize their burgers so they arrive exactly the way they want them. Instead of waiting in a queue and then talking across the counter to a McDonald salesperson, a burger lover can choose from a selection of options while sitting comfortably in his booth. No pickles, hot sauce or a different condiment? Just click on the menu tab. Some McDonald’s outlets offer an option to "create your own taste" burgers that are presented on wooden boards with fries that come in a basket.
Domino's Pizza Enterprises Ltd which operates in six countries, is making plans to grow its slice of the A$14 billion ($10.33 billion) quick service restaurant trade in Australia.
Obesity Zooming
Fast food company profits are zooming, of course, but so are people’s weights. Official data reported last week showed that 40 percent of Australian adults are dangerously obese and have a poor diet, a reflection on their infatuation with fast foods.
A report just released by the Cancer Council showed that Australian’s expenditure on fast food and eating out has grown by 50 per cent in the past six years, with Australians spending nearly a third of their weekly household food budget on dining out and fast foods.
According to Clare Hughes, Nutrition Program Manager at Cancer Council NSW, “More than 60% of Australian adults and almost a quarter of Australian children are currently either overweight or obese.”
The report also revealed the need for targeted changes to be implemented in order to reduce the amount of saturated fat, salt and sugars that are found in fast food menu items. Proper labelling on all fast food items is necessary and although it has been introduced in some establishments, not all fast food outlets have come on board. Additionally, different levels of nutrition information are being offered to customers depending on where they dine. A unified effort to promote healthy fast food will go a long way towards bringing those kilograms down in Australia.
Lower kilos, higher Aussie. Serious efforts needed for both.
