Australia: The Riches and Challenges of Commodities

Posted: 22 Jul 2009

See all articles by Laura Alfaro

Laura Alfaro

Harvard University

Renee Kim

Harvard University - Business School (HBS)

Date Written: June 18, 2009

Abstract

Australia's Prime Minister Kevin Rudd faced a daunting task that he never imagined he would have to face when he was elected two years ago. Australia at that time was poised to enter its 17th year of uninterrupted growth. Commodity exports were booming, largely driven by China's insatiable appetite for raw materials. Then the global financial crisis erupted in 2008, brewing challenges for the world's biggest exporter of coal and iron ore. Prime Minister Rudd pushed for massive stimulus packages to revive domestic consumption and demand. Yet as an economy heavily dependent on trade, tumbling commodity prices brewed difficult times for Australia's trade deficit and its persistent large current account deficit. What was in hold for Australia's deficit, which had been in the red all but four years since 1950? In addition, how should policymakers address the intense concerns regarding China's growing interest in Australia the form of direct investments, particularly in Australia's prized natural resources sector?

Suggested Citation

Alfaro, Laura and Kim, Renee, Australia: The Riches and Challenges of Commodities (June 18, 2009). HBS Case No. 709-007, Harvard Business School BGIE Unit, Available at SSRN: https://ssrn.com/abstract=1436465

Laura Alfaro (Contact Author)

Harvard University ( email )

Cambridge, MA 02138
United States

Renee Kim

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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