From the Australian Financial Review overnight, a lengthy piece on an outlook for the Australian economy. In brief:
- Iron ore plunged to a five-year low of $US85.70 a tonne
- Former chief economist and head of the Australian Bureau of Resources and Energy Economics, Quentin Grafton, said the Chinese economy looked like it was “unravelling” (OK, wait, in full he said … “I’m no China expert but it seems to be unravelling.”)
- Said falling prices for coal and iron ore, a slump in business investment, an overpriced housing market and high dollar had placed the Reserve Bank of Australia “between a rock and a hard place”
- “Put all those things together and it could be a difficult ride for us”
- “This isn’t about doom and gloom – it’s about looking at the risks and numbers. There’s a clear and present danger”
The remarks add to doubts about the economy’s underlying resilience and the robustness of the government’s revenue expectations after this week’s national accounts showed income fell in 2013-14 and 2012-13, the first two-year decline since the early 1990s recession. The incomes crunch looks likely to continue.
More at the article, it does not appear to be gated: Economy enters danger zone