Australian Treasurer Jim Chalmers poses for a photo as he attends a meeting of G20 finance ministers and central bank governors in Gandhinagar, India, July 18, 2023. REUTERS/Amit Dave acquires licensing rights
SYDNEY, Aug 27 (Reuters) – Australia’s Treasurer Jim Chalmers said on Sunday the government is watching China closely amid “worrying” signs of economic weakness that could weigh on Australia’s economy.
“I share the pretty big concerns that people have been expressing about the Chinese economy,” Chalmers told Sky News.
“It is worrying to see the weakness and weakness in the Chinese economy over the past few weeks and months as it has obvious implications for us here in Australia.”
The recovery in China, the world’s second largest economy, has stalled on a worsening housing crisis, weak consumer spending and slowing credit growth, prompting authorities to cut interest rates and pledge further support, while analysts downgraded growth forecasts.
China is commodities exporter Australia’s top trading partner with A$285 billion in annual trade, although Canberra has urged exporters to become less dependent on China amid diplomatic tensions.
“In China, they’re dealing with slower growth, they’re dealing with deflation, there are concerns in their real estate sector and to some extent their banking sector, their exports have also slowed,” Chalmers said. “Our concerns are particularly about China.” is something we are monitoring very closely.”
Australia’s growth “will be much weaker due to the slowdown in China and rising Australian interest rates,” he said.
The Reserve Bank of Australia left interest rates unchanged in August for the second straight month after raising rates by 4 percentage points in 16 months to curb inflation.
“The general direction is pretty clear – our economy is slowing down,” Chalmers said.
Australia’s economy grew 0.2% in the first quarter, the slowest in a year and a half, as high prices and rising interest rates weighed on consumer spending.
Reporting by Sam McKeith in Sydney; Edited by William Mallard
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