WHAT DOES IT MEAN FOR AUSTRALIA?
For Australia, the market crash in China is likely to impact earnings on key exports iron ore and coal, further slashing government revenue, while also putting downward pressure on the Australian dollar.
Jordan Eliseo, chief economist with ABC Bullion, said it was important to remember that the amount of wealth Chinese citizens have tied up in the stock market is relatively minor compared with western investors.
Stocks only make up about 8 per cent of household wealth in China, compared with around 20 per cent in developed nations.
“The market crash there is generating headlines, but it’s not going to have the same impact as a comparable crash would in a developed market,” he said.
“What it means for Australia, though, is it’s very clear there are some serious imbalances in the Chinese economy, and the rate of growth they’ve enjoyed in the past is over. There’s no question our export earnings are going to take another hit.”
Mr Eliseo predicts Australia is likely to experience “recession-like” conditions such as negative wage growth for many years to come. “I believe that’s going to be the new norm,” he said.
Would've thought you'd be all up on that, Deb.
You have more important things to worry about, I suppose.