Recession continues in Europe and Japan. The USA remains in the state of political uncertainty on the threshold of presidential election. What about the Green Continent, Australia?
Lost between two oceans, Australia was increasing its economic potential while the northern hemisphere was suffering from the consequences of economic and financial storms. Australia managed to double its GDP from 1998 to 2008. The living standard in Australia became one of the highest in the world. The rate of the Australian dollar has been growing too. The cost of the Australian national currency has doubled vs. the US dollar twice.
The economic crisis that struck the world in 2008 did not affect the economy of the Green Continent much. The Australian government had to devalue the national currency a little and toughen the immigration law. Unlike other economically developed countries, Australia managed to avoid recession. The country showed a growth of two percent in 2009. That was very interesting indeed, because other countries of the so-called Anglo-Saxon economic model - the USA and the UK in the first place - had pretty rough times during the crisis.
One of the main reasons for Australia's success was the country's close connection with China, the prime locomotive of global economy. The Celestial Empire regularly buys Australian metals, construction materials and agricultural products. The world's second biggest economy (at least, before the 2011 tsunami and quake), Japan, cooperates with Australia closely too. The development of the former British colony showed that there was actually nothing negative about an economy based on raw materials, if there was harmony in distributing income in all sectors of economy. In 2011, The Economist included four Australian cities on the list of world's ten most comfortable cities in the world. Noteworthy, Melbourne topped that list.
Australia was very nervous about the new forecast about the development of the Chinese economy. Chinese top officials stated last week that they were expecting a decline of up to 7.5 percent. Any other country in the world could only dream about those numbers. However, the 1.5-billion-strong China has to have the growth of not less than eight percent a year. The previously unsinkable Chinese economy now faces the consequences of the debt crisis and the decrease of demand in Europe. The future of the global economic locomotive is now vague. At the end of February, WB President Robert Zoellick predicted an economic collapse to the Celestial Empire, unless the Chinese authorities took radical measures to improve the situation. The Japanese economy sank into recession as well, which made Britain's The Sun assume that the Australian dollar would have hard times in the near future.
The slowdown of the Chinese economy affected Australia already at the end of 2011. The growth of the GDP in the last quarter turned out to be much worse than it was in the beginning of the year. The decline continued in 2012. Home construction activities dropped by nearly 4 percent. Unemployment continued to grow in February and reached the level of 5.2 percent of the number of employed individuals. This number looks ridiculous as compared to the situation on the European labor market. However, this is very sad news for the Australians. People started losing their jobs.
Australian economists had to acknowledge the dependence of the national economy on the export of products of the mining industry. The situation in Australia can only prove it again: it is impossible to hide away from economic storms in the globalized economy.