Answer to Question #15059 in Macroeconomics for jack

Question #15059
What are the macroeconomic dangers facing Australia?
Expert's answer
The challenging economic environment in Australia was marked by low growth and
poor business and consumer confidence, particularly in sectors and industries
operating in the slow lanes of Australia’s multi-speed economy, a further
tightening of credit markets spooked by the ongoing sovereign debt crisis in
Europe and the threat of the collapse of the Eurozone, volatile equity markets,
and concerns about productivity and industrial relations.
In Australia,
local shares remain the cornerstone of most portfolios, and recession is the
dominant driver of big falls in corporate earnings. Over the past 50 years,
there have been five occasions when Australian corporate earnings have fallen by
10.0 percent or more. On each occasion there has been a recession or dramatic
decline in the rate of economic growth. The key fundamental risk facing
Australian investors is therefore an economic recession.

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