Australia's Economic Good Times Ride on China's Expansion | Voice of America - English
Australia's economic outlook remains one of the best among the world's industrialized countries, with unemployment at nearly 30-year lows after 15 years of uninterrupted growth. Economists say part of that growth comes from trade with Asia - especially China, which is soaking up vast amounts of Australia's natural resources.  These are economic good times and Australians are enjoying rising salaries with low inflation and unemployment. The jobless rates are the lowest in nearly 26 years.
However, Brian Redican, the senior economist at Macquarie Bank, warns against relying too much on one market. "Australia is becoming increasingly dependent on China as a key trading partner. Not just in terms of exports themselves but also Chinese companies investing and developing Australian infrastructure. So if there was a downturn in the Chinese economy, that could have quite profound implications for Australia," he explained. Australian Prime Minister John Howard has made it clear he wants to expand trade with the rest of Asia. This week, he attended the summit of the leaders of the Association of Southeast Asian Nations in Laos to talk about trade and other issues. Australia's trade with the 10 ASEAN countries stands at $33 billion a year. Mr. Redican at Macquarie Bank says Australia is well placed to increase trade in Asia. He notes that most of the country's exports do not compete directly with the goods produced in Asia. "Asia's an exciting place to be. It's where most of the world's growth is going to come from in the next 20 or 25 years and it certainly makes sense to be based there," said Mr. Redican. But there are concerns about Australia's economic strength. Low interest rates and rising incomes have fueled demand for housing, leading Australians to borrow heavily to buy homes. Personal debt has reached its highest level in 40 years. Economists fear a sharp rise in either interest rates or unemployment may lead to hard times for many people burdened with debt. The economic forecasts for Australia in 2005 remain positive, although most developed economies are expected to slow in the coming year. The Australian Financial Review newspaper recently reported that 25 economists expect the country's growth to top three percent - with inflation at 2.5 percent. Economists say that while global growth may moderate in 2005, Australia can continue its economic expansion by building exports, especially with China.