Federal Resources Minister Josh Frydenberg has warned Australians to be prepared to witness the impact of the deteriorating Chinese economy, which he mentions to be the nation’s “normalized” growth pattern.
The ASX has lost tens of billions of dollars since the beginning of 2016. Seeing the economic turmoil, economists have derived a conclusion saying that the slowing economy has begun to affect government revenue in Australia. In January, the crude value reached the lowest in 12 years, prompting loss of jobs across energy companies, including BHP Billiton, Rio Tinto and Fortescue Metals.
The sluggish Chinese economy and oversupply of resources has led to the falling prices of commodities, the resources minister stated. Frydenberg added that Australians must get used to the lowering commodity prices as it was going to continue for a longer period. At the same time he also said that the fundamentals of Australian economy are still strong, including population growth increase, more urbanization and greater middle classes.
The minister said that in December, revenue projections were penned down following the economic update provided in the month. He said that the commodities are capable of offering the same amount of dollars to government coffers as it did before. “There are still some positive signs over the horizon about demand,” Frydenberg said as quoted by the ABC. “Prices have dropped significantly [but] I still think that Australia will be a great beneficiary out of its resource sector.”
On Monday, the Australian share market was down with 1.75 percent with the value of the dollar slipping to a seven-year low. The dropping oil prices and lowering Chinese stock values are major concerns at the moment. Australia has been found indicating slowest income growth since more than half a century as depicted by a Deloitte Access Economics report.
Treasurer Scott Morrison, however, said that the nation enjoys a stable economy in spite of the disturbing economic moment, referred to as a “worrying time” for the nationals.