Answer to Question #15059 in Macroeconomics for jack
What are the macroeconomic dangers facing Australia?
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.