The German bank warned of the growing risk of recession in Australia in 2013, as prices for its key commodities such as iron ore and coal spiral lower. The warning comes amid rising concern that Australia’s mine expansions are being scaled back and the country is experiencing mounting job losses.
Australia’s terms or trade (heavily dependent on commodities such as iron ore, coal and gas) may collapse by as much as 15 per cent in 2012, said the bank’s chief economist.
Prices for key exports of coal and iron ore have slipped to multi-year lows as growth in China, the country’s biggest trading partner, has cooled.
Problems for Australia’s exporters are being deepened by a soaring Australian dollar, which is around 30-year highs. Calls have gone out for the Reserve Bank of Australia to weaken the currency either through interest-rate cuts or direct market intervention.
The RBA today said it expected the mining investment boom to peak during 2013-14, but added the timing of the peak was uncertain.
Source: The Australian