News Wrap

IN THIS morning’s News Wrap: growth hit by mining boom end; rigid labour rules drag rank to lowest in 25 years; and IMF’s China growth forecast takes second dip

Staff Reporter

Growth hit by mining boom end

For the first time, the OECD has cast serious doubt on Australia’s future after the resources boom, joining the growing fear among experts about how to manage the economic transition, according to the Australian Financial Review.

In an unusually blunt report, the Paris-based group forecast below-average growth this year and acknowledged the pending September election was creating uncertainty in the economy.

The report added to mounting evidence that global investors are reassessing Australia’s resilience.

The world’s biggest bond fund, PIMCO, said yesterday the Reserve Bank of Australia might need to cut official interest rates even lower as investment in resource projects slows and a weaker Chinese economy saps demand for iron ore, coal and other exports.

Rigid labour rules drag rank to lowest in 25 years

Australia has fallen to its least competitive position among 60 advanced and developing economies in a quarter of a century, according to The Australian.

As concerns mount that the end of the resources boom will trigger the first local recession in more than two decades, Australia has slipped one place to 16th on the index compiled by the IMD World Competitiveness Centre.

IMF’s China growth forecast takes second dip

The International Monetary Fund has lowered its Chinese growth forecast for a second time in just six weeks, completing a startling about-face on its projections for the world’s second-biggest economy, according to the Australian Financial Review.

It was just 14 months ago that the IMF was expecting China to grow at 9.5% this year. On Wednesday at a briefing in Beijing it said that number was more likely to be 7.75%.

The sharp downward revisions reflect how quickly expectations have changed, after China’s central government’s refused to launch a new round of fiscal stimulus as the economy weakened last year.

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