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Global 21 fourth quarter 2015

In Focus Australia Challenging times for commodities-based economy Australia has the planet’s largest reserves of lead, nickel, uranium and zinc, and is among the world’s biggest economies. Yet slow growth and relatively high unemployment have led some to question whether the economy is heading towards recession Rowan Snow The mood music around the health of Australia’s economy varies, depending on who is being asked. Disappointing growth in 2015 so far – the economy grew by just 0.2 per cent in the second quarter – has led commentators to ask whether Australia is heading for another recession. Meanwhile, Finance Minister Mathias Cormann argues that while other commodities-based economies, like Canada and Brazil, have slipped into recession, Australia’s economy is still growing, albeit more slowly than before. “Given all of the external challenges that we’re facing, on the back of our economic plan for stronger growth and more jobs, the economy’s performing better than other similar economies in other parts of the world and that is surely good news,” he told ABC News 24 when the second quarter results were released. But investment banks are warning that the housing market could collapse and drag the rest of the economy down with it. House prices have risen dramatically in Australia in recent years, with the property market becoming a major driver of the economy since the mining boom peaked and began to tail off. Over the last few months, however, signs of high household debt and a possible over-supply of housing has alarmed economists. Credit Suisse has warned that Australia’s property market is now “riskier than the equity market”. Malcolm Turnbull’s post-takeover cabinet reshuffle saw Treasurer Joe Hockey lose his job to Scott Morrison, with Morrison immediately pledging to cut spending and return the budget to surplus. “We have a © Jason Benz / Shutterstock.com Gold mine in Kalgoorlie Boulder, Western Australia four 62 l www.global -br ief ing.org th quar ter 2015 global


Global 21 fourth quarter 2015
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