Advanced Search

Share Coverage



Category: Economic Trends

Australian economy faring well against tough global conditions

Monday, 18 Apr 2016 06:57:07 | Rebecca Hyam

Australia has suffered an income hit from slumping iron ore prices. (supplied: Roy Hill)

A key economic report has praised Australia's performance, given the ongoing slowdown in China and the overall state of the global economy.

Deloitte Access Economics' latest Business Outlook stated that, while short-term growth in Australia would likely be modest, the economy was managing to weather most challenges.

Deloitte Access Economics partner Chris Richardson said Australia has kept growing, despite a number of hurdles.

"Don't forget that China's had a substantial slowdown, that things like iron ore prices and coal prices are well below where they were," he observed.

"That combination means that some of the huge construction jobs in mining - they're drawing to a close.

"That's a pretty tricky backdrop and against that backdrop, Australia's actually done very well."

China stimulus 'not a permanent solution'

The report suggested the rout in commodity prices and softening economic conditions in China would remain the biggest challenges for the domestic economy in the short term.

Mr Richardson said a number of emerging and developed economies would continue to struggle amid the fallout from China's economic evolution.

"It's throwing stimulus money at its slowdown and that's not a permanent solution," he said.

"It's transition will continue to be a challenge for Australia, and although things like iron ore prices are higher than they were, they're not high enough to generate that next round of mining construction projects in Australia."

Low rates to continue with 'global inflation taking a siesta'

The outlook also said that, with no sign of inflationary pressures on the horizon, Australian interest rates were set to remain low for a long time.

The report stated that, "in a world where there is too much capacity and too little demand, global inflation is taking a siesta".

It also noted that the domestic economy was struggling to adjust to the biggest pay cut the world has ever delivered, via slumping commodity prices.

Add to that the fact that housing prices are now so stretched, particularly in Sydney, and the report suggested the Reserve Bank would need to take a gentle approach to any interest rate rises.

Mr Richardson said all of those things meant the cash rate was likely to stay at the historically low level of 2 per cent, well into next year.

"You absolutely wouldn't say that there was a particular case to expect Australian interest rates to rise any time soon," he said.

AustraliaPlus


 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend