Australia plays down Asian financial crisis<\/p>\n
CANBERRA (Reuters): Australian Treasurer Peter Costello,
\nbuoyed by strong economic data, yesterday rejected economists'
\nwarnings that Asia's financial crisis would engulf Australia and
\nstunt economic growth.<\/p>\n
Australia's biggest trade earnings came from strong economies
\noutside Southeast Asia, which would help Australia weather a
\npossible export downturn in the region, Costello said.<\/p>\n
However, fears of an Asian recession landed on Australia's
\ndoorstep yesterday, sparking a sell-off of the local dollar as
\ninvestors took fright at the pain likely to be felt by the
\nregion's closest trading partners.<\/p>\n
In the first clear sign of Australia's vulnerability to the
\nAsian crisis, the Australian dollar shed 1-1\/2 cents to a 28-
\nmonth low of US$0.7100.<\/p>\n
The stampede out of the currency came after financial market
\neconomists issued fresh reports warning Southeast Asia, the eye
\nof the economic storm and a major buyer of Australian goods,
\nfaced zero growth or even recession.<\/p>\n
Economists have warned the financial and economic crisis that
\nhas already forced Thailand and Indonesia to seek foreign help
\nand has hit neighbouring economies could flow on to Australia and
\nwipe up to 1.5 percentage points off growth in 1997\/98.<\/p>\n
\"In relation to Southeast Asia ... about 10 percent of our
\nexports go to the four countries most affected,\" Costello said,
\nreferring to Thailand, Indonesia, Malaysia and the Philippines.<\/p>\n
\"Our biggest trading partners are still Japan, the U.S.,
\n(South) Korea, New Zealand and, of course, they are strong
\neconomies ... that won't be affected, as the Australian economy
\nwon't be affected, in any large measure by this.\"<\/p>\n
The Australian dollar fell on Wednesday to 71 U.S. cents, its
\nlowest level in more than two years, as investors stampeded out
\nof the currency due to concerns about the impact of the Asian
\ncrisis and the chance of another rate cut.<\/p>\n
Official data released yesterday showed Australian inflation
\ntumbling to its lowest level in a generation, fuelling
\nspeculation of a sixth interest rate cut in 15 months.<\/p>\n
The Consumer Price Index measure of inflation actually fell
\n0.3 percent in the year to September, the data showed.<\/p>\n
Australia is contributing US$1 billion to a US$17.2 billion
\ninternational bailout package for Thailand and has offered to
\nhelp Indonesia if necessary.<\/p>\n
Defending its aid package against critics such as race row
\npolitician Pauline Hanson, Canberra has said Australia's own
\neconomic interests gained from measures to shore up stability and
\neconomic growth in the region.<\/p>\n
Asia's ill winds could blow about one percent off Australian
\neconomic growth in the fiscal year ending June 1998, they said.<\/p>\n
One of Australia's biggest fund managers, National Mutual
\nFunds Management (NMFM), said on Wednesday it believed the
\neconomic cost to Australia could even be higher over time.<\/p>\n
\"Basically we reckon it's going to be something like 1.5
\npercent to two percent off growth because Asia, including Japan,
\ntakes 65 percent of our exports,\" NMFM's head of international
\nstrategy and research, Nigel Purchase, told Reuters.<\/p>\n
Brokerage SBC Warburg was reported to have warned of a \"full-
\nblown\" recession and banking crisis in Southeast Asia, knocking
\n0.8 of a percentage point off Australian growth.<\/p>\n
Other economists were more sanguine, forecasting the Asian
\nturmoil would at worst retard 1997\/98 growth by 0.5 percent.<\/p>\n
Among the bears, NMFM sees economic growth of only 2.75
\npercent in 1997\/98, compared with the government's forecast of
\n3.75 percent growth and official talk of perhaps four percent.<\/p>\n
Australian companies caught in the cross-fire of the Asian
\ncurrency crisis may tell a different story, with exporters facing
\nsluggish demand and local manufacturers facing stiffer import
\ncompetition from Asian rivals, economists said.<\/p>\n
Many share market investors have already turned their backs on
\ncompanies they see as vulnerable.<\/p>\n
Soft-drink bottler Coca-Cola Amatil Ltd, which counts the
\nPhilippines as its biggest revenue generator, and casino operator
\nCrown Ltd, which draws half its revenue from Asian visitors, have
\nboth seen their shares fall heavily.<\/p>\n
The Asian crisis has also cast a shadow over current
\nnegotiations between Australian iron ore and coal producers and
\ntheir big Japanese customers on 1998\/99 prices.
\nCoal and iron ore are two of Australia's biggest exports.<\/p>\n
The prices they fetch in Japan will hinge partly on demand for
\nJapanese exports from the rest of Asia, said Australian think
\ntank National Institute of Economic and Industry Research.<\/p>\n
But while some Australian companies are preparing to weather
\nthe storm, others now see buying opportunities, especially in
\nSoutheast Asia, and a chance to ride the next wave of growth.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/australia-plays-down-asian-financial-crisis-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}