Econintersect: Australian economist Ross Garnaut, Distinguished Professor of Economics at the Australian National University, was interviewed this week on the newly formed Macro Business TV. The host of the session was David Llewellyn Smith, Macro Business editor, who blogs as “Houses and Holes”.
Prof. Garnaut foresees significant impacts on the rest of the world as China rebalances from an investment, export and manufacturing economy to a consumption and services economy.
Video may be viewed later in this article.
Garnaut expects that China will invoke additional stimulus later in 2013, but not in the area of infrastructure as in the past. He sees the 2013 spending to be in improving energy efficiency and investment in what the Chinese call the “Low Carbon Economy”.
The impact on Australia was particularly in focus as Prof. Garnaut sees the mining industries that have fueled the Australian economy suffering a big hit. He suggested that the realignment of currencies could see the Aussie dollar devalued by 20% to 40% as a result of diminished exports to China. This will be a shock to many Australians – the country has gone more than 21 years without a recession, a record for any country in the world – ever!
Garnaut sees also a big impact on the world economy from the increased energy production and lowered energy costs in North America.
Sources:
Comment of the Week, MBTV and Reddit (Macro Business, 25 May 2013)
Garnaut urges RBA move on dollar, rates (Tim Colebatch, The Age Business Day, 17 April 2013)
