World Bank Says China Slowdown Threatens Australia

23 May 2012 15:00 - Mark Maffia

World Bank Says China Slowdown Threatens Australia

The World Bank has said Australia’s economy could be at risk as the debt crisis in Europe threatens China’s export markets. The World Bank has said today in its twice yearly update of economic forecasts for East Asia, that growth in the region is expected to slow 7.6% in 2012, down from 8.2% in 2011 and nearly 10% in 2010. Australia’s biggest trading partner, China, is forecasted to see economic growth slow to 8.2% in 2012, down from 9.2%, before rising slightly to 8.6% in 2013.

In the East Asia and Pacific Update the World Bank said, “Commodity exporters, many of which experienced strong in 2011, may be particularly vulnerable to a faster slowdown in China,” adding, “A quicker-than-anticipated slowing of the Chinese economy could trigger an unexpected drop in commodity prices, which could force some commodity exporters to adjust rapidly.” The report said a slowdown in Europe, where countries are struggling with crippling debts and Greece is at risk of leaving the eurozone, would hit East Asian economies by reducing demand for exports and reduced liquidity in financial markets. However, it said, rising domestic demand and strong government balance sheets meant most countries in the region were well-positioned to weather renewed market volatility.