Europe debt will affect Australia: RBA Governor
Reserve Bank Governor Glenn Stevens has warned that while the European debt crisis will not have a severe effect on Australia directly, its indirect influences will need to be monitored.
Stevens noted that Europe only accounts for about five percent of Australian exports and “those exports have been declining over the past few years anyway because the euro area has been weak for a while” so its direct effects wouldn’t be significant.
However, the governor did warn that the crisis would become a global malaise since Europe had influence on other markets such as Asia and that “we in Australia must naturally keep a careful watch on all this,” he said.
It would also affect future global growth, he suggested. “Looking ahead, it has to be expected that the unfolding situation in Europe, which is going to result in earlier fiscal tightening than had been assumed by forecasters until now, will weigh somewhat on global growth in 2011.”