Economist: Australia Cannot Ignore Global Economic Indicators
Its helps if Australia will learn from history, according to renowned economist John Hewson, and prepare as early as possible for the easing down of global demands for its resources exports.
"It doesn't make good governance at all to be so deeply in debt to China," the former Reserve Bank of Australia (RBA) official was reported by The Herald Sun as saying on Monday, stressing too that the country's over dependence on its trade relations with China bodes ill for the country's general economy.
While it's true that the mining shipments afforded Australia more than sufficient breathing room during the height of the global financial crisis, Hewson maintained that "our minerals boom can evaporate and in any case that boom is not of much benefit to the economy generally."
"One day, China will stop paying high prices for commodities, like Japan and Korea did before them," according to the former Liberal Party stalwart, adding that while the time is still convenient Australian should also be offered to other markets.
Hewson pointed to the Middle East and North African regions, which in the years ahead could embark into accelerated mode of development and industrialisation.
By that time, he added, the evaporation of mining profits, which mostly were destined to be remitted by foreign companies operating in Australia to their parent companies, would not leave the local economy in a state of shock.
Appearing at the Australia Arab Chamber of Commerce and Industry gathering at Melbourne on Friday, the former International Monetary Fund (IMF) official predicted that the global economic difficulties we are witnessing will be extended far into the next decade, at most.
"I believe we are in for a fairly difficult period for the next five or 10 or more years ... and chances of a credit squeeze like the one in 2008 is not high, but there is a risk of one," Hewson told his audience.
He cautioned that the prospect of the world economy spinning down into a global depression is real and Australia is far from immune on that possibility as he stressed that "it's a systemic problem and it can spread internationally, and that is where Australian banks can hit the wall."
Such scenarios, Hewson pointed out, could bring down governments like what happened in Greece and Italy, and should serve as an ominous guide for the sitting Australian Labor Party.