Bali blasts to hit Australian consumer confidence<\/p>\n
Phil Smith, Reuters, Sydney<\/p>\n
The weekend bomb attacks on the Indonesian holiday island
\nresort of Bali that killed nearly 200 people, many of them
\nAustralian, are likely to have a knock-on but fairly short-term
\nimpact on the Australian economy.<\/p>\n
Kuta, where the attacks ripped through nightclubs filled with
\nyoung Australians, is seen as a de facto Australian resort so
\nconsumer confidence and spending patterns could take a hit in a
\ncountry unused to such horror on its doorstep, analysts said on
\nMonday.<\/p>\n
Australians have sat spellbound as local media showed images
\nof charred bodies and badly burned victims after what was the
\nworst strike against civilians since the September 11 hijacked
\naircraft attacks on New York and Washington.<\/p>\n
\"For Australian markets and the Australian economy, the
\nbombings will have an unfavorable but probably temporary effect
\non consumer confidence,\" said HSBC chief economist John Edwards.<\/p>\n
The government has said 15 of its nationals were confirmed
\ndead and about 220 unaccounted for. The nationalities of many of
\nthe 183 bodies recovered from the blast scene have yet to be
\ndetermined.<\/p>\n
The major economic point about the bombings is that it will
\nlikely stay the Reserve Bank of Australia's (RBA) hand when it
\nmeets to decide on rate policy in November.<\/p>\n
\"Whatever chance there was of a November Reserve Bank of
\nAustralia rate rise has probably been reduced to zero,\" HSBC's
\nEdwards said.<\/p>\n
The RBA has left the key 4.75 percent cash rate unchanged
\nsince June as global uncertainty saw world markets fretting over
\nthe pace of growth. The cash rate is still a long way short of
\nwhat is seen as neutral policy around 5.5 percent.<\/p>\n
In isolation, the events in Bali will not have a lasting or
\nmajor economic impact in Australia, but taken in the context of
\nwhat is seen as an escalation of violent attacks worldwide the
\nbombing could be more significant.<\/p>\n
\"There has been an escalation of this kind of activity and
\nthat adds to uncertainty to the general macro backdrop,\" said
\nDeutsche Bank senior economist Tony Meer.<\/p>\n
He was referring to the recent shooting of a U.S. Marine in
\nKuwait, a suspected attack on a French supertanker in the Gulf of
\nAden and a suspected terror cell that was broken up in Italy.<\/p>\n
\"You should not overplay the broader implications of it (the
\nBali bombing) but putting it in context, it is a continuation of
\nthe global uncertainty,\" Meer added.<\/p>\n
Jitters over a U.S. strike on Iraq if it fails to disarm has
\ncaused major world markets to tumble in recent months.<\/p>\n
In the medium term, if Australians are encouraged to spend
\nholidays at home rather than abroad the impact of the Bali
\nbombings could perversely be positive as domestic holiday
\nexpenditure provides an offset.<\/p>\n
On top of this, interest rates may be kept lower than perhaps
\nthey would have been and there may be more spending by the
\nAustralian government on security.<\/p>\n
Nevertheless a near-term knick to confidence is unavoidable.<\/p>\n
Analysts said October's Westpac-Melbourne Institute consumer
\nsentiment survey index on Wednesday will no doubt show a sharp
\ndownturn as it was conducted over the weekend of the bombings.<\/p>\n
The index rose 2.7 percent in September to 108.5 from 105.6 in
\nAugust following a cumulative 6.5 percent fall over the past two
\nmonths.<\/p>",
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