Descriptions of Graphs for Speech by I.J. Macfarlane, Governor

Graph 1: Terms of Trade

This graph shows Australia's terms of trade on a quarterly basis from the March quarter 1970 to the September quarter 2005; observations for the June and September quarters 2005 are RBA estimates based on renegotiated contract prices for coal and iron ore. The graph shows that the terms of trade have increased significantly since 1999, particularly over the past two years, to reach levels not seen since the early 1970s.

Sources: ABS; RBA

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Graph 2: Housing Developments

This three-panel graph shows three series relating to housing in Australia, from 1998 to early 2005. The first panel shows the year-ended percentage change in housing credit. It shows that growth in housing credit has slowed noticeably over the past year or so, from a year-ended pace of more than 20 per cent to around 12 per cent. The second panel shows the year-ended percentage change in Australian house prices (an average of five measures). It shows that Australian house prices have been broadly stable over the past year or so, following annual growth of around 20 per cent over the previous couple of years. The third panel shows dwelling investment as a percentage of GDP in current prices. It shows that dwelling investment has risen strongly as a proportion of GDP since late 2000, and while easing slightly in recent quarters, remains high at around 6½ per cent of GDP.

Sources: ABS; RBA

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Graph 3: Terms of Trade and Real Exchange Rate

This graph shows Australia's terms of trade and real exchange rate on a quarterly basis since 1984 (see Graph 1 for a description of the terms of trade series). The graph shows that, apart from the late 1990s and early 2000s, the terms of trade and the real exchange rate have moved together fairly closely. Consistent with the steep rise in the terms of trade, the real exchange rate has also increased sharply over recent years, to be well above the post-float average, though the real exchange rate has not risen by as much as would have been expected on the basis of its past relationship with the terms of trade.

Sources: ABS; RBA

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