Gareth Hutchens | Sydney Morning Herald | August 15, 2011
Australia is well-placed to withstand another global financial crisis compared with other developed economies, the World Bank president, Robert Zoellick, says.
Australia could afford another stimulus package if the global downturn hit the local economy, Mr Zoellick said.
”In general, I think most economies are now in the position where they’ve used a lot of their fiscal space and monetary policy is about as loose as it can be,” he told the Asia Society AustralAsia Centre annual dinner in Sydney. ”Australia is in a different situation.”
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Mr Zoellick said economic reforms put in place since 1983, including the dismantling of tariff barriers, had helped. ”What I’ll
suggest is that overall, Australia is in a much better position than other developed countries in part because Australia undertook a lot of the structural reforms … and also on the fiscal side, the debt was paid down so it’s about 7 per cent of GDP now,” he said.
”Whatever the policy decisions, and political decisions in Australia, it’s in a better position along with the fact it’s continued to pursue an open trade policy and take advantage of its position in the Asia-Pacific.”
However, he said a loss of confidence in the leadership of the world’s biggest economies has pushed the global economy into a new “danger zone”.
China’s economic growth rate was unsustainable, he said.
If China’s real income per person reached $20,000 by 2030, ”that’s like having 25 South Koreas … one of the things that the Chinese are well aware of is that the growth model they’ve used for the past 30 years simply is not sustainable, it’s got to change. In part, the rest of the international economy couldn’t absorb that.”
He also raised the prospect that the US dollar – now the principal global reserve currency – would eventually share the stage with multiple reserve currencies.