AUSTRALIA'S economy, driven by a booming mining sector, is among the fastest-growing in the developed world. It has the enviable combination of low unemployment and little debt.
Yet its central bank has cut interest rates. The reason: Nearly every part of the economy outside mining is struggling, and there is fear among some small businesses and economists that if China stops gobbling up Australia's coal and iron ore, the remainder of the economy would be too weak to pick up the slack.
The central bank is hoping to give the rest of the economy a boost. Since November, the Reserve Bank of Australia has cut rates by 1.25 percentage points to 3.5 per cent, even as first-quarter gross domestic product grew 4.3 per cent, its quickest pace in more than four years.
The risk is that Australia will become so dependent on mining that weakened demand could lead to recession. Mining accounts for about 7 per cent of the economy, nearly double its share in 2000, official figures show.
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The Australian
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