Jul 20 2015
A leading economic forecaster says the chance that Australia will see a recession is rising as China weakens.
A report from Deloitte Access Economics is predicting that China’s slowdown has further to go, with its growth set to drop to the lowest in a quarter of a century.
Deloitte director Chris Richardson said that has implications for Australia.
“The chance of a recession is higher now than its been for quite sometime and China, and the potential for stumble there, is what people need to focus on much more than Greece or indeed China’s share market,” he told ABC News.
“It is China’s economy which is key.”
China recently released official gross domestic product data which showed that growth slowed to 7 per cent over the past year, which matched the authorities’ target.
Chris Richardson said the real situation may actually be worse than what China’s official figures show.
“We’re now in a phase where perhaps the official numbers are overstating China’s strength,” he argued.
“This is an economy with challenges – it’s doing surprisingly well given those challenges, so far, but you shouldn’t underestimate just how big those challenges are.”
Chris Richardson said it will prove to be impossible for the Federal Government to deliver on its budget promises if China does continue to slow.
“It could easily be worse – much of the Australian federal budget comes with a made in China stamp and, if China continues to juggle its challenges or if the senate doesn’t play ball over the bigger dollar issues, then it will be impossible to deliver those official forecasts around the budget,” he added.