Australia says can cope with worst world can throw

Tuesday, 9 August 2011 00:25 - - {{hitsCtrl.values.hits}}

SYDNEY (AFP) : Australia said Monday its economy could cope with the worst the world can throw at it as stocks continued to suffer after Standard & Poor’s cut its US credit rating for the first time.

Treasurer Wayne Swan said he had been consulting regularly with Australian regulators and with finance ministers from the G20 group of advanced economies over the global turmoil.

He pointed to an IMF report over the weekend that endorsed Canberra’s economic management and that Australia’s outlook was favourable, largely because of strong demand for commodities and investment in mining.

“Yesterday’s (IMF) report points to the fact that our economy has been very well run. Because of that we are in a very good position to cope with the worst that the world can throw at us,” Swan told ABC radio.

“What we have got to do is closely observe these events as they unfold in Europe and the United States.

“What Australians can have confidence in is the fact that we are in the strongest part of the global economy, the Asia-Pacific, and our strength here, particularly in Australia, is far stronger than just about any other developed economy.”Swan rejected suggestions that the government’s plan to return to surplus in 2012/13 was increasingly uncertain because of the slump in growth.

“The global situation will make things more difficult but the government remains committed to delivering our surplus as planned,” he said.

While Australia largely weathered the global financial crisis, the economy has hit some turbulence in 2011 and the central bank slashed its 2011 growth forecast Friday from 4.25 percent to 3.25 percent.

Investors have become increasingly jittery, with Standard & Poor’s docking of the United States’ rating from AAA to AA+ with a negative outlook late on Friday adding to the worries.

It was reflected in early Australian trading with stocks down more than two percent at one point following a four percent rout on Friday.

But they clawed back some losses and at around 0215 GMT shares were 0.96 percent lower.