China Reforms Good for Australian Economy: S&P

Australian economy

The Australian economy will benefit from the reforms in China; this was stated by rating agency S&P.  The agency also asserted that although the results may take some more time to show up, Australia has all the fundamentals in place to make that happen.

They include the fairly strong exchange rate, market flexibility, strong government and rational financing.

According to SP, Australia will have an annual economic growth between 2.5 percent to 3 percent over the next few years, reports Sky News.

S&P chief economist for Asia-Pacific Paul Gruenwald said the Asia-Pacific will lead global economic growth, in 2016 and the coming year, reports SBS. This is despite a tumultuous start in 2016.

• Regional growth of 5.3 percent in sight for 2016
China to grow 6.3 percent this year
• India to grow 7.9 percent growth in the current financial year.

Recent economic data also suggests that the Australian economy is recovering soundly though that it is not the case with many overseas economies. For Australia, it is the international scenario that is exerting downward pressure on its official interest rates.

According to Conversation, the ABS data on a number of parameters suggests that the Aussie economy is improving. The number of job vacancies for the 3-month period up to February was up by 3.1 percent implying a 13.4 percent jump in the number of job vacancies compared to February 2015.

That shows labour market conditions in Australia are better.
Good news is that business credit is up. It expanded 0.7 percent in February, up from 0.6 percent in January, leaving the annual growth rate at 6.5 percent vis a vis 5.5 percent of February 2015. It means if businesses are borrowing they are investing and creating jobs to boost the GDP.

The report surmises that RBA leaving interest rates unchanged is an indication that it is convinced that the economy is growing though soaring dollar is a concern. It noted that logic of interest rate policy is to perk up the economy with cuts in rates to reinforce demand when it is not doing well and hiking the rates when the economy is heating up.

To Top