Economists believe Australia is in a good economic position, yet we’re still running scared.
HOW did we get here? Was it only five days ago that the prospects of an interest rate rise were strong, and inflation loomed as the big bogyman of the Australian economy?
Yesterday, as Australian shares plunged as much as 4.6 per cent, Treasurer Wayne Swan urged Australians to ”never forget” the nation’s credentials are among the ”strongest in the developed world”. He hearkened back to the global financial crisis, which Australia managed to survive without sliding into a recession. ”Australia has a proven track record of dealing with global economic uncertainty,” he said. ”There is just a world of difference between the situation in Australia and the situation in Europe and the United States.”
Yet, Australia’s retail sector is reeling from the high dollar and battered consumer confidence. On Wednesday came news that in the 12 months to June 30 retail spending grew just 2.6 per cent, the weakest rate of growth in 50 years. On Thursday, another clothing brand called in administrators.
Meanwhile, opposition treasury spokesman Joe Hockey has enraged the government when he referred to debt-stricken Greece after being challenged on a claim that Australia’s debt level was ”significant”. Although he clarified that Australia could pay its debt, Mr Hockey said the country’s reliance on foreign funds was a key vulnerability.
”Australia is a massive importer of money, and just as the financial crisis hit our banks last time, there is the capacity for similar events to hit us again,” Mr Hockey said.
Mr Swan accused Mr Hockey of recklessly trying to talk down the economy. “To compare Australia’s finances to those of Greece not only defies logic, but is grossly irresponsible for someone who lays claim to high office,” Mr Swan said.
Australian government debt is 7.2 per cent of GDP – one-tenth the comparable level of other OECD nations.