Recession, inflation and China
January 9th 2008 08:30
Still riding on the back of a 'looming' US recession, the local market fell marginally today. The ASX S&P 200 benchmark index shed 0.7% at closing. Now the question is how many times have we heard of a recession coming up in the US? Since mid last year and this time, experts believe, will be the real thing. Again another question, how many times have we heard a US recession is about to begin? Same answer.
The Treasurer believes that Australia could weather the recession but business confidence of the near future is not too bright. And it got dimmer today when Commonwealth Bank today joined NAB and ANZ in raising their interest rates.
Middle Australia would suffer and likely to cause a drop in overall demand and dampen the inflation but job vacancies are on the rise which could offset the dampening. But it is still in early in the year to find out more.
On the world front, experts believe China could be the alternative should US really falls into a recession as the impact on the Asian giant may be limited.
As reported by the AFP:
'Daniel Rosen, a China expert at the Washington-based Peterson Institute for International Economics, said a US recession could take a toll on industries in China most dependent on US exports, especially those producing goods for the American household sector.
But he hastened to add that China's ongoing moves to boost domestic consumption in a bid to be less reliant on exports could be a critical cushion.
"At the same time though, as China shifts more to domestic consumption itself, then it relies less on US consumers and more on the Chinese consumer. So I don't expect there to be a heavy hit on China from a moderate recession," he said.
The World Bank said Tuesday that US economic growth likely slowed to 2.2 percent in 2007. The bank forecast a 1.9 percent expansion in 2008, then a rise to 2.3 percent in 2009.'
The Treasurer believes that Australia could weather the recession but business confidence of the near future is not too bright. And it got dimmer today when Commonwealth Bank today joined NAB and ANZ in raising their interest rates.
Middle Australia would suffer and likely to cause a drop in overall demand and dampen the inflation but job vacancies are on the rise which could offset the dampening. But it is still in early in the year to find out more.
On the world front, experts believe China could be the alternative should US really falls into a recession as the impact on the Asian giant may be limited.
As reported by the AFP:
'Daniel Rosen, a China expert at the Washington-based Peterson Institute for International Economics, said a US recession could take a toll on industries in China most dependent on US exports, especially those producing goods for the American household sector.
But he hastened to add that China's ongoing moves to boost domestic consumption in a bid to be less reliant on exports could be a critical cushion.
"At the same time though, as China shifts more to domestic consumption itself, then it relies less on US consumers and more on the Chinese consumer. So I don't expect there to be a heavy hit on China from a moderate recession," he said.
The World Bank said Tuesday that US economic growth likely slowed to 2.2 percent in 2007. The bank forecast a 1.9 percent expansion in 2008, then a rise to 2.3 percent in 2009.'
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