Australia will dodge Europe’s worsening financial turmoil because of strong Asian demand for its raw materials, which also pulled it through the global downturn, the central bank chief said yesterday.
Reserve Bank of Australia Governor Glenn Stevens said the European market was shrinking in importance, adding that China’s GDP could outstrip the eurozone within five years.
European finance ministers this week agreed on a US$525 billion fund for debt-stricken nations and a right to oversee national budgets in response to the deepening crisis, which has hit Greece and Spain especially hard.
“The [European] episode is not yet over, and the issues will continue to need careful handling by all concerned and close monitoring by the rest of us,” Stevens said.
“It cannot be denied that the potential for further financial turmoil exists,” he said.
Stevens added that it was “hard to see how euro [zone] demand won’t be weakened” in the next couple of years and warned that Europe’s sovereign debt troubles would weigh on world growth next year.
However, the governor said Australia was likely to be little affected by ebbing European demand, with its strong banking system, credible fiscal and monetary policies and little exposure to the most troubled nations.
The euro area only accounted for 5 percent of Australia’s exports and that volume had been “declining over the past few years anyway because the euro area has been weak for a while,” Stevens said.
“This doesn’t mean there will be no effects. But these factors put us in the best position to ride through this particular event, even if it does get worse,” Stevens said.
Resource-rich Australia skirted the financial crisis due to strong exports to Asia, which helped it become the only advanced economy not to enter recession and the first to raise interest rates, currently at 4.5 percent.
The rapid rebound in Asia’s economies and demand for raw materials had shored up Australia’s strong economic position, with low public debt and easing deficit, he said.
Rallying prices for iron ore and coal, both key steelmaking ingredients, would boost Australia’s terms of trade to their highest level in 50 years, Stevens said.
However, China and other Asian economies are forecast to slow in the coming year, “because the pace of growth over the past year can’t be sustained without problems arising,” he added.
China in particular was having some success taking the steam out of sectors of its economy, including house prices, meaning that the “peak in the terms of trade won’t be sustained”.
But Stevens said it was “increasingly apparent that the Asian region is becoming large enough that it has a tangible independent impact on the global economy and on Australia in particular.”
China and East Asian nations excluding Japan were likely to account for about 20 percent of the world’s economy this year, with China’s GDP forecast to exceed that of the eurozone within five years, Stevens said.
The government is aiming to recruit 1,096 foreign English teachers and teaching assistants this year, the Ministry of Education said yesterday. The foreign teachers would work closely with elementary and junior-high instructors to create and teach courses, ministry official Tsai Yi-ching (蔡宜靜) said. Together, they would create an immersive language environment, helping to motivate students while enhancing the skills of local teachers, she said. The ministry has since 2021 been recruiting foreign teachers through the Taiwan Foreign English Teacher Program, which offers placement, salary, housing and other benefits to eligible foreign teachers. Two centers serving northern and southern Taiwan assist in recruiting and training
WIDE NET: Health officials said they are considering all possibilities, such as bongkrekic acid, while the city mayor said they have not ruled out the possibility of a malicious act of poisoning Two people who dined at a restaurant in Taipei’s Far Eastern Department Store Xinyi A13 last week have died, while four are in intensive care, the Taipei Department of Health said yesterday. All of the outlets of Malaysian vegetarian restaurant franchise Polam Kopitiam have been ordered to close pending an investigation after 11 people became ill due to suspected food poisoning, city officials told a news conference in Taipei. The first fatality, a 39-year-old man who ate at the restaurant on Friday last week, died of kidney failure two days later at the city’s Mackay Memorial Hospital. A 66-year-old man who dined
EYE ON STRAIT: The US spending bill ‘doubles security cooperation funding for Taiwan,’ while also seeking to counter the influence of China US President Joe Biden on Saturday signed into law a US$1.2 trillion spending package that includes US$300 million in foreign military financing to Taiwan, as well as funding for Taipei-Washington cooperative projects. The US Congress early on Saturday overwhelmingly passed the Further Consolidated Appropriations Act 2024 to avoid a partial shutdown and fund the government through September for a fiscal year that began six months ago. Under the package, the Defense Appropriations Act would provide a US$27 billion increase from the previous fiscal year to fund “critical national defense efforts, including countering the PRC [People’s Republic of China],” according to a summary
‘CARRIER KILLERS’: The Tuo Chiang-class corvettes’ stealth capability means they have a radar cross-section as small as the size of a fishing boat, an analyst said President Tsai Ing-wen (蔡英文) yesterday presided over a ceremony at Yilan County’s Suao Harbor (蘇澳港), where the navy took delivery of two indigenous Tuo Chiang-class corvettes. The corvettes, An Chiang (安江) and Wan Chiang (萬江), along with the introduction of the coast guard’s third and fourth 4,000-tonne cutters earlier this month, are a testament to Taiwan’s shipbuilding capability and signify the nation’s resolve to defend democracy and freedom, Tsai said. The vessels are also the last two of six Tuo Chiang-class corvettes ordered from Lungteh Shipbuilding Co (龍德造船) by the navy, Tsai said. The first Tuo Chiang-class vessel delivered was Ta Chiang (塔江)