Australia faces a “long, tough and bumpy road” to economic recovery, with joblessness, interest rates and prices to rise long after the crisis begins to ease, Prime Minister Kevin Rudd said yesterday.
In a 6,000-word essay published in the Sydney Morning Herald, newspaper, Rudd said Australia needed to embark on a decade of “nation-building” to protect itself from financial disasters.
The worst global economic crisis since the Great Depression has slashed A$210 billion (US$170 billion) from government revenues and cost A$77 billion in stimulus measures to cushion the blow, he said.
Early signs have begun to emerge of the “green shoots” of recovery, but Rudd warned the process would be a protracted and painful one for Australia, which has only begun feeling the worst effects of the credit crunch.
NOT OVER YET
“For some time after the worst period of the crisis Australians will feel continuing financial pressures and, in some areas, increased economic pain, not least because employment is a lagging economic indicator, not a leading one,” Rudd said.
“As the global economy improves demand for commodities will pick up, causing prices to rise. For Australia, this will be a double-edged sword, providing a boost to our exporters but potentially inflicting higher food and petrol prices,” he wrote.
Record low interest rates will rise, he said, while returning the budget to surplus from 2016 would involve some “painful and unpopular decisions that will affect many Australians.”
The unemployment rate would likely peak a year after growth returned to positive territory, and economic pressures would hit just as the first benefits of recovery were felt, he said.
But with 70 percent of stimulus measures directed at infrastructure and nation-building projects, Rudd said he believed Australia would emerge a stronger economy.
GOVERNMENT MEASURES
He also said government intervention, which included billions in one-off cash handouts to taxpayers, appeared to be gaining traction.
Rudd said “Australia is performing better than most other economies, with the fastest growth, the second-lowest unemployment and the lowest debt and deficit of all the major advanced economies.”
“We remain the only advanced economy not to have gone into recession,” he wrote.
Australia has so far avoided a technical recession, which is defined as two successive quarters of economic contraction.
It has posted the strongest figures of any advanced economy during the downturn.
Interest rates are at a 49-year low of 3 percent and unemployment, which Canberra has forecast to peak at 8.5 percent in June 2011, is at 5.8 percent.
Resource-rich Australia enjoyed a boom period of growth until this year as Chinese demand for its raw materials brought in a stream of export revenue.
Rudd called for an end to reliance on the “rollercoaster of the boom and bust of the mining sector on the sharemarket.”
Instead, he said, Australia needs to reform its economy by embarking on a “building decade” to enhance long-term productivity.
HORMUZ ISSUE: The US president said he expected crude prices to drop at the end of the war, which he called a ‘minor excursion’ that could continue ‘for a little while’ The United Arab Emirates (UAE) and Kuwait started reducing oil production, as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply. Abu Dhabi National Oil Co (ADNOC) is “managing offshore production levels to address storage requirements,” the company said in a statement, without giving details. Kuwait Petroleum Corp said it was lowering production at its oil fields and refineries after “Iranian threats against safe passage of ships through the Strait of Hormuz.” The war in the Middle East has all but closed Hormuz, the narrow waterway linking the Persian Gulf to the open seas,
Nanya Technology Corp (南亞科技) yesterday said the DRAM supply crunch could extend through 2028, as the artificial intelligence (AI) boom has led the world’s major memory makers to dramatically reduce production of standard DRAM and allocate a significant portion of their capacity for high-bandwidth memory (HBM) chips. The most severe supply constraints would stretch to the first half of next year due to “very limited” increases in new DRAM capacity worldwide, Nanya Technology president Lee Pei-ing (李培瑛) told a news briefing. The company plans to increase monthly 12-inch wafer capacity to 20,000 in the first half of 2028 after a
Taiwan has enough crude oil reserves for more than 100 days and sufficient natural gas reserves for more than 11 days, both above the regulatory safety requirement, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday, adding that the government would prioritize domestic price stability as conflicts in the Middle East continue. Overall, energy supply for this month is secure, and the government is continuing efforts to ensure sufficient supply for next month, Kung told reporters after meeting with representatives from business groups at the ministry in Taipei. The ministry has been holding daily cross-ministry meetings at the Executive Yuan to ensure
RATIONING: The proposal would give the Trump administration ample leverage to negotiate investments in the US as it decides how many chips to give each country US officials are debating a new regulatory framework for exporting artificial intelligence (AI) chips and are considering requiring foreign nations to invest in US AI data centers or security guarantees as a condition for granting exports of 200,000 chips or more, according to a document seen by Reuters. The rules are not yet final and could change. They would be the first attempt to regulate the flow of AI chips to US allies and partners since US President Donald Trump’s administration said it rescinded its predecessor’s so-called AI diffusion rules. Those rules sought to keep a significant amount of AI
RSS