Shareswatch Australia

The interest rate cut yesterday by the Reserve Bank of Australia suggests that finally the RBA understands that the Chinese economy will not keep expanding at a rapid rate while its major trading partners are struggling. But even if the Chinese economy slows more than most economists expect this is unlikely to send the global economy back into a GFC-like slump.

According to many major news outlets and financial commentators in Australia, the recent trade data released by the Australian Bureau of Statistics (ABS) is proof  that the Australian economy is “booming”.  The Reserve Bank also seems to think the nation is in the midst of a boom and the amazing Ken Henry (of where is my tax report fame) reckons Australia will enjoy a “golden age” for decades.

Over the past few weeks most of the economic news from Australia’s major trading partners has been fairly good. As a result the Australian stock market has continued to rise along with markets in Europe, Asia and the United States. But before we get too carried away it is probably a good idea to look beyond stock prices in order to check how the global economy is really faring.

It seems that many financial journalists and commentators have decided that Australia has escaped a recession, and that the economy is doing just fine now based on the  June Quarter GDP figures that have just been released. But I wonder how many of them looked into the GDP data in detail and spotted the warning signs?