Sydney, Sep 16 (ANI): The Reserve Bank of Australia (RBA) on Thursday said Australia's economic strength is no longer marching in step with the economy of the United States, but has instead shifted its focus to the fast-expanding Chinese economy.
"There were risks and challenges ahead for emerging economic powers like China and India that would have an impact on Australia. Over the past decade it had become apparent Australia's economy was growing in step with China, a major consumer of Australia's natural resources," The Sydney Morning Herald quoted RBA Assistant Governor (Economics) Dr Philip Lowe, as saying at the NatStats 2010 conference here today.
"A decade or so ago, we spent a lot of time puzzling over why quarterly movements in Australian GDP were so highly correlated with quarterly movements in US GDP. We don't puzzle over this anymore - not because we solved the puzzle, but because the correlation has fallen," he added.
Dr Lowe claimed the correlation between quarterly movements in Australian and Chinese GDP has steadily increased at the same time.
"Clearly what happens in the Australian economy is now more dependent upon what happens in China than has been the case at any time in our past. The road to economic prosperity for China, as well as India, would have its challenges as well as benefits for Australia," said Dr Lowe.
He further said the Chinese authorities faced a tough job in rebalancing growth away from exports to investment and domestic consumption.
"The surge in commodity prices seen over the past year would abate with new sources of supply being developed, while new technologies could reduce demand for Australia's main resources - coal and iron ore," said Dr Lowe.
"The farming sector could benefit as global demand for food, particularly in China and India, grew. Over the years ahead, it is quite likely that global demand for protein will grow strongly, particularly if India and China continue on their current paths," he added. (ANI)