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Europe still a risk to Australian economy

in International Business

Europe still a risk to Australian economy

According to the Reserve Bank of Australia, the growth forecast for 2012 is better than expected, however problems in the eurozone pose a threat.

 In its statement of Monetary Policy released on Friday, the RBA said strong data readings in the first half of the year had prompted a revision of gross domestic product (GDP) forecasts for 2012 as a whole.

“The firm pace in the first half of the year sees the forecast for GDP growth over 2012 rise to three and a half per cent (from three per cent in the May statement),” it said.

 Data released since the previous statement suggested a better economic performance in early 2012, mainly driven by increased resource investment and confident household spending.

 However according to the central bank , the healthy growth in Australia could still be derailed by risks in the eurozone.

 “The economic and financial events in the euro area remain a significant downside risk to global economic growth,” it said.

 The RBA warned that there is a real possibility of the exit of one or more nations from the eurozone, and a number of scenarios could cause growth in the region to plunge.

 “Other risks to the global economy are slightly tilted to the downside, though much less so than is the case for Europe,” it said.

 The RBA has said it is also uncertain about the rate of growth in China, Australia’s number one trading partner, even though it appears to be stabilising at the moment.

 


Tags assigned to this article:
Australian economyEurozone CrisisRBA

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