Friday, January 23, 2009

China was going to save Australia. But now...

This morning:

John Garnaut

"CHINA may never again power the Australian economy like it has over the past five years, posing huge risks to the local economy, ripping billions from exports, and almost certainly driving the budget into deficit.

In figures significantly worse than the Rudd Government was anticipating, China's National Bureau of Statistics yesterday said annual growth almost halved from 13 per cent in 2007 to 6.8 per cent in the year to December - below the arbitrary 8 per cent threshold that Chinese leaders say creates risks of social instability.

Citigroup calculates the economy shrank 0.1 per cent in December from the September quarter - the first contraction in at least 16 years..."

Michael Stutchbury

"THE International Monetary Fund is poised to slash Australia's economic growth forecasts to not much above zero as the global financial crisis extends into the year ahead.

The IMF warning coincides with official confirmation that China's economic growth, the engine room of Australia's recent boom, slowed more sharply than forecast, to 6.8 per cent from 9 per cent in the final quarter of last year, as the global downturn hit.

The IMF's first deputy managing director, John Lipsky, told The Australian yesterday the global recession was deepening even as central banks repeatedly cut interest rates.

While backing the principle of using government budgets to support growth, he cast doubt on whether short-term fiscal expansion - such as the Rudd Government's one-off payments to households - would boost spending and stave off recession..."

Vanessa O'Shaughnessy

"AUSTRALIANS have suffered their worst losses on superannuation in living memory, with typical funds losing an average of almost 20 per cent in 2008, new figures reveal.

Research agency SuperRatings said the average balanced fund dived by 12.5 per cent in the second half of 2008, and by 19.7 per cent for the full calendar year.

It was the worst annual result since the start of compulsory superannuation in the early 1990s, wiping out any gains made over the past three years.

It also raises the spectre of an unprecedented two consecutive financial years of heavy losses on people's retirement savings if local and overseas shares — in which most funds are heavily invested — continue to flag..."

And no. I don't enjoy reporting this sort of news.