“Australia faces a gathering threat to its 21-year run of recession-free growth that will likely require the central bank to cut interest rates to record lows and keep them there for some time, if the winning streak is to stretch to 22.
The slowdown in China has deflated prices for Australia’s key resource exports while forcing miners to scale back on their most ambitious expansion plans. When the country reported its widest trade deficit in three years for August, it seemed just a taste of what was to come.
As a result, she expected the economy’s strength would bleed away into 2013, leaving it dangerously exposed should a seven-year old boom in mining investment also top out that year.
The government and central bank still forecast growth of around 3 percent for the next couple of years.