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Australia has been the strongest performing economy of the currencies that we cover, but it is slowing. Real GDP was up 1.9% in the third quarter from a year ago. Current dollar GDP was up 10.3% in the third quarter from a year ago. Consumer prices were up 5.0% in the third quarter from a year ago, the most since 2001. The unemployment rate in November increased from 4.3% to 4.4%. On November 4, 2008, the interest rate was reduced from 6.00% to 5.25%, the third cut in 2008. On October 13, 2008, JPMorgan Chase predicted that real GDP would be up 2.5% in 2008 and up 1.8% in 2009. On November 5, 2008, the government said that it expected real GDP to be up 2.00% in 2008.

According to the Heritage Foundation, Australia was ranked 4th in the world in 2008 in terms of economic freedom, just ahead of the U.S. The government spends 35% of the nation's income, which is low when you consider that they also fund two-thirds of the country's healthcare expenses. The top income tax rate is high, at 47%, but the corporate rate is 30% and overall tax revenues only amount to 31% of the nation's income. On October 9, 2008, the World Economic Forum said that Australia's banking system was the fourth soundest in the world.

Fundamental Stats -

This economy is likely in recession as real GDP was down .6% in the third quarter, but up .3% from a year ago. This comes after an increase of 3.0% in 2007. In nominal terms, GDP was up 2.3% in the third quarter from a year ago. Consumer prices were up 4.5% in October from a year ago, down from a 5.2% gain in September. The (ILO) unemployment rate for August to October was 6.0%, up from 5.8% the previous month. On November 3, 2008, the European Commission said that the U.K. will suffer the most from the financial crisis and they expect real GDP to shrink 1.0% in 2009. On November 12, 2008, the Bank of England said that the economy was already contracting and they expect real GDP to be down 2% in the first half of 2009. On December 4, 2008, the Bank of England lowered its interest rate from 3.00% to 2.00%, the lowest rate since 1951. It was the fifth reduction in 2008.

In terms of economic freedom, the Heritage Foundation has the U.K. ranked tenth in the world. The government spends 45% of the GDP which is high, but of course, they also offer more public services like universal healthcare. The top individual income tax rate is 40% and the top corporate income tax rate is 30%. The U.K. also charges a value-added tax and an environmental tax. Altogether, tax revenues amount to 37% of the nation's income.

Fundamental Stats -

Canada's economy is slowing, affected by the credit crisis in the U.S. Real GDP was down .1% in October and up just .2% from a year ago. In 2007, real GDP was up 2.7% after gaining 2.8% in 2006. The unemployment rate in November increased from 6.2% to 6.3%. The consumer price index was up 2.0% in November from a year ago. The latest change in interest rates occurred on December 9, 2008 when the Bank of Canada reduced the overnight rate from 2.25% to 1.50%. It was the sixth cut in 2008. As of October 21, 2008, the Bank of Canada expects real GDP to be up just .6% in 2008 and in 2009.

In terms of economic freedom, in 2008, the Heritage Foundation moved Canada from 10th to 7th in the world. The government spends 39% of the nation's income and they offer many public services, like healthcare. The top individual tax rate is 29%, but the provinces add more. The general corporate income tax rate is 20.5%. Tax revenues amount to 34% of the nation's income. Fiscal year 2008-2009 may show another budget surplus for the 12th consecutive year (Hey U.S. - it can be done!). On October 9th, a survey by the World Economic Forum said that Canada had the soundest banking system in the world.

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The European economy is contracting but more and more, the euro is acting like the new dominant currency. In the third quarter of 2008, real GDP was down .2%, but up .6% from a year ago. This comes after growth of 2.6% in 2007 and 2.7% in 2006. On December 4, 2008, European Central Bank President (ECB) Trichet said that he expects real GDP to be down .5% in 2009. In October, the unemployment rate in EU-15 increased from 7.6% to 7.7%, the highest in two years. The consumer price index was up 2.1% in November from a year ago. On December 4, 2008, the ECB reduced its key interest rate from 3.25% to 2.50%, the third reduction in 2008.

In terms of economic freedom, old Europe still lags behind. The Heritage Foundation has the three largest economies - Germany, France, and Italy - ranked 23rd, 48th, and 64th respectively in the world. The governments in those same three countries consume 47%, 54%, and 49% of their nation's incomes, making it very hard for the private sector to grow. Germany's top income tax rate is roughly 48% and the top corporate rate is somewhere between 26% and 39%. As if that was not enough, in 2007 they also increased their value-added tax from 16% to 19% - not a sign of progress (just ask Japan how their value added tax increase went in 1997).

Fundamental Stats -

Real GDP in Japan was down .5% in the third quarter of 2008 and down .4 from a year ago, the first official recession since 2001. Nominal GDP was down 1.9% from a year ago. That comes after a 2.1% gain in real GDP for calendar year 2007 and a 2.4% gain in 2006. The unemployment rate improved from 4.0% to 3.7% in October, better than expected. Consumer prices in Japan were up 1.7% in October from a year ago. On December 19, 2008, the Bank of Japan reduced the interest rate from .30% to .10%. Also, on December 19th, the government predicted that real GDP will be flat in 2009-2010. Japan's fiscal year ends on March 31st.

In terms of economic freedom, Japan's world ranking improved from 39th in 2005 to 17th in 2008, according to the Heritage Foundation. Japan has a top individual tax rate that can reach to 50% and a top corporate rate as high as 41%. The government spends 37% of their national income, not bad compared to other leading economies.