Australia’s close links to China in these tough financial times are going to have significant negative effects on Australia’s economy, according to a new report. From The International Herald Tribune:
In a starkly worded quarterly outlook report, the Australian research firm Access Economics warned that the mining-led economy “will unwind scarily fast” in 2009, sending the Australian dollar and interest rates crashing.
“This is not just a recession. This is the sharpest deceleration Australia’s economy has ever seen,” said the report, which was released Monday.
The report predicted that the Australian dollar would fall from 68 U.S. cents to 56 cents and that the central bank would be forced to cut interest rates from 4.25 percent to 2.5 percent to stimulate growth.
“China’s slowdown is Australia’s recession,” the report said. “Many businesses will fail, as demand gains shrink.”
The report even referred to the Australian economy as being “buggered”. Read this report from The Daily Telegraph.