Australia's economic growth slows as fears of the China effect mountComments Off on Australia's economic growth slows as fears of the China effect mount
Australian economic growth came in at just half the rate economists had expected in the second quarter, prompting fears that the slowdown in China is beginning to have a knock-on effect on its neighbours.
Australia, particularly Western Australia, is highly dependent on Chinese demand for its coal, iron ore and copper and has been hit by falling demand from Chinese manufacturers.
Today saw GDP growth of just 0.2% quarter on quarter and 2% year on year against forecasts of 0.4% and 2.2% respectively. The economy grew by 0.9% in the first quarter.
Australian treasurer Joe Hockey played down lower commodity prices and said: “The transition away from a reliance on mining investment is well underway.
“Quite clearly there is resilience in the Australian economy that other economies that have huge exposure to commodity prices could only wish for,” he added.
Chinese shares staged something of a recovery in late trading today before a two-day public holiday to mark the 70th anniversary of its victory over Japan in the Second World War.
The Shanghai index, which had been down 4%, closed just 0.2% lower. Chinese shares have fallen by more than 20% since mid-August and 39% since the bull market run ended in June.
In Hong Kong the Hang Seng index fell 250 points to 20,934.94, its lowest close since July 2013.
In London, the FTSE 100 was moderatly higher at 6085.02, while European markets were looking directionless with the main indices in Paris and Frankfurt recording rises of around 0.1%.
Among the biggest fallers in the FTSE 100 were Glencore and Standard Chartered, both of whom were hit by Chinese worries.
US stock futures were indicated up as much as 0.9%.