Collapse in world trade generates problems for growth

Collapse in world trade in Asia-Pacific and China’s slowing growth will cause further economic depression

A collapse in world trade in the Asia-Pacific region and drop in China’s economic growth will cause further depression in Australia’s economic outlook.

The forecast from credit reporting and business intelligence firm Dun and Bradstreet (D&B) shows Australia’s growth for 2009 will drop from 0.5 percent to an alarming -0.2 percent.

Worldwide, 70 counties had their risk rating downgraded over the past six months and more negative news is expected in the face of a weakening global economy.

The dry-spell for world trade faces yet another problem for Australia as exporters contend with a dwindling demand for both finished and raw products.

Since the September 2008 quarter, some of Australia’s key trading partners - including China, South Korea, Hong King and Vietnam - have suffered risk downgrades.

The biggest blow for Australia is China’s predicted poor economic growth, as it has stimulated much of Australia’s growth for the last decade.

Chinese imports dropped 43.1 percent year on year in January, while goods export nationwide fell 17.5 percent.

D&B CEO Christine Christian says according to the data the worst is yet to come for Australia.

"The mass country risk downgrades, slump in world trade and forecast decline in growth for many of our key trading partners all point to a deteriorating outlook. This requires a unique balancing act from the Australian Government," Christian says.

"They need to continue to stimulate the Australian economy but do so in a way that avoids contributing to protectionist trends, both manufacturing and financial, around the world.

"For Australian businesses the only way to survive this environment is to focus on the fundamentals. Effectively assess and monitor risk, tightly manage cash flow and market to those customers who represent the best risk."

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