India says inflation may be ‘under pressure’ until December
Australia’s rebounding coal exports and resource investment should help shield the economy from global growth risks emanating from from the U.S. and Europe, Deloitte Access Economics said.
Australia “has two big aces up its sleeve,” the Canberra- based economic advisory company said in a report today. “There is still a lot of recovery to come from the floods and cyclones of early 2011 -- coal exports will jump through to early 2012, providing a large one-off boost to growth. More importantly, growth this financial year and next relies mostly on the capital expenditures of miners.”
The government estimates Australia’s pipeline of resource investment at A$430 billion ($438 billion), with about 40 percent of plans already at an advanced stage. The Reserve Bank said in minutes of its October monetary policy meeting released yesterday that the value of liquefied natural gas projects announced so far in Australia is about A$70 billion.
RBA Governor Glenn Stevens kept the overnight cash rate target unchanged at 4.75 percent on Oct. 4, extending an interest-rate pause to 11 months, as employment growth slowed and global risks increased. The weaker outlook and declining confidence reflect an unresolved European sovereign-debt crisis and a tumble in shares that erased $10 trillion worth of equities worldwide last quarter.
‘Bad News’
“Although there is a lot of bad news around, the key bit of good news -- the impact of China on mining capex -- remains a thing of beauty,” Deloitte Access said in the report. “The rest of the economy could pack up and go home and the announced capex pipeline could still keep growth going for the better part of a year.”
Gross domestic product in China grew 9.1 percent in the third quarter from a year earlier, the slowest pace since 2009, the government statistics bureau said yesterday in Beijing. The expansion was less than the median estimate of 9.3 percent in a Bloomberg News survey of 22 economists and follows a 9.5 percent gain in the previous three months.
China is unlikely to have a “hard landing” and its economy may be resilient enough to withstand international financial turmoil, Secretary to the Australian Treasury Martin Parkinson said.
“Domestic demand continues to grow strongly and China has much policy space should there be a major slowdown in global growth,” Parkinson said in a speech yesterday. “In the long term we are optimistic about the potential drivers of strong growth in China, given the large scope for urbanization and industrialization.”
The Deloitte Access report said that that while Europe’s financial markets “are a ticking time bomb,” Australia’s economy may be insulated.
“Europe is ablaze with risks, but -- strikingly -- spot iron-ore prices have held up in recent months,” the Deloitte Access report said. “Indeed, with the world still throwing big bucks at coal and iron ore, trade surpluses are the best seen in decades.”