The federal government’s former top resources forecaster says the economy faces a painful downturn in 2015 as a property crisis in China accelerates the biggest hit to Australia’s export income in more than two decades.
Speaking after iron ore plunged to a five-year low of $US85.70 a tonne, the former chief economist and head of the Australian Bureau of Resources and Energy Economics, Quentin Grafton, said the Chinese economy looked like it was “unravelling”.
He said falling prices for coal and iron ore, a slump in business investment, an overpriced housing market and high dollar had placed the Reserve Bank of Australia “between a rock and a hard place”. “Put all those things together and it could be a difficult ride for us,” he said. “This isn’t about doom and gloom – it’s about looking at the risks and numbers. There’s a clear and present danger.”
This post was published at AFR
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