China is the danger

The market plunge in China is many times more important to Australia’s outlook than the Greek drama.

Summary: Large share market falls, such as the current moves in China, affect consumer and business confidence for many years. The Chinese government is trying to reverse the fall, but is not acting decisively enough. Commodity markets are falling, which puts pressure on Australian budgetary forecasts.

Key take-out: The Chinese slowdown could be greater than most economists forecast. While there are exceptions, share market falls of 30 per cent plus normally cause a steep economic decline.


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