Latest data from Australian Bureau of statistics, revealed Australian economy remains trapped under Chinese economic slowdown and showing no signs of overcoming the weakness.
- In April 2015, Australia hit worst trade deficit on record to -$3.8 billion and worst is still not over. If Chinese Appetite for Australian metals and minerals doesn’t recover (which is under sincere doubt), there may not be any respite for Australian economy.
Australian economic exports to China grew from $1 billion in 2005 to almost $10 billion by 2013. With tenfold increase in export it would not be unusual for companies to over rely on it. However, the bust, which got companies unprepared is taking large hit since 2013.
Both Australian exports statistics and Chinese domestic indicators are pointing to further slowdown this year. Total export have fallen to lowest level since 2012 around $ 7 billion.
Australian domestic demand is also not helping the country, which failed to grow in April after zero percent growth in March.
As upcoming data will reveal further slowdown in China, Reserve bank of Australia (RBA) will reduce rates further both to provide support for ailing economy and move Australian dollar down so that the exports can bring more local currencies home.
Australian dollar has taken support of crucial 0.75 area against dollar, however a break over the coming months is likely and Aussie to drop further down.
The material has been provided by InstaForex Company – www.instaforex.com