Melania Trump Club

Saturday, August 6, 2011

Australian economy safe and strong

Credit rating agency Standard & Poor's decision for the first time ever to downgrade the US from a AAA to AA+ rating caps a two-week period that has seen the Australian market drop more than 10 per cent, wiping off more than $50 billion.

Wall Street finished up higher after a rally late on Friday following stronger than expected employment figures, but investors remain nervous about toxic debt levels in Spain and Italy.

Amid the turmoil, Prime Minister Julia Gillard yesterday called on Australians to trust in the "strong fundamentals" of our economy.

Ms Gillard said while Australia was not immune to global events, the nation was in a strong financial position.

We should have confidence that our economic credentials are among the best in the world," she said.

"We should also have confidence that we have handled in the past global instability.

"This Government has a proven track record of handling global instability. And we should also have confidence in the strong fundamentals of our economy.

"We have low debt, low unemployment, the Budget coming into surplus in 2012-13, a AAA credit rating and we are looking to strong economic growth."

Ms Gillard said that with a quarter of Australian exports going to China, Australia had its best terms of trade in 140 years.

"We are in the right part of the world. The part of the world that continues to grow. That means we will continue to see strong economic growth in our region," she said.

Treasurer Wayne Swan yesterday assured Australians our AAA credit rating was safe.

S&P attached a "negative outlook" to the new rating.
"The downgrade reflects our opinion that the fiscal consolidation plan that congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilise the government's medium-term debt dynamics," S&P said in a statement.
But Ms Gillard called on Australians to remain confident about Australia's economy and its "strong fundamentals" despite what was happening globally.
"People should look with confidence at our economic credentials and fundamentals, and people should look with confidence at the ability of this government to deal with global instability," she said.
"We have done it before.
"We came out of the global financial crisis without having gone into recession."
Treasurer Wayne Swan today said Australia's own gold-plated triple-A credit rating was safe and secure and could not be more different to the US.
Mr Swan said Australia had known for some time the US faced a long and painful adjustment to get its budget back on a sustainable medium-term footing.
"But they've taken an important first step towards this objective," he said.
"S&P's announcement comes amid heightened volatility over the past week in international financial markets driven by continuing concerns about the weakness of the US economic recovery and sovereign debt levels in Europe."
Mr Swan said Australia was not immune from events in the rest of the world but the Australian economy's fundamentals remained strong.
He said unemployment was low, public finances were strong with very low debt and a huge pipeline of mining investment.
"Australia's gold-plated triple-A rating is safe and secure," he said.
"It's been recently affirmed and we are widely considered to be in the top-tier, even among the exclusive club of developed economies in the world to share the highest rating."
Mr Swan said the parliament had just about passed the budget in full, a budget that included the biggest fiscal consolidation in the nation's history.

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