Australia's China dream turns nightmare

The abyss into which Australia’s freshly minted resources economy is digging has never been more clear than today. From the IMF via the AFR:

While Ms Lagarde hasn’t provided details of the findings in her speeches, deputy managing director Min Zhu told an audience in Dalian, China, this month that a near halving of investment growth in the second-biggest economy over the next five years would cut about 1 percentage point from Australia’s potential GDP growth rate by the end of that period.

…For each percentage point decline in Chinese investment growth, Australia’s potential GDP falls by 0.2 of a percentage point, Dr Zhu’s modelling predicts.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

Australia’s China dream turns nightmare