Europe’s Debt Crisis Threatens China’s Economy and Australia Will be Influenced

Australia’s economy could be at risk as Europe’s debt crisis threatens China’s export markets, the World Bank says on Wednesday in a biannual East Asia and Pacific economic update.

The World Bank warns growth across East Asia is expected to slow to 7.6 per cent in 2012, down from 8.2 per cent in 2011 and nearly 10 per cent in 2010. China, Australia’s biggest trading partner, is expected to see economic growth slow to 8.2 per cent in 2012, down from 9.2 per cent, before lifting slightly to 8.6 per cent next year.

It warns, if Europe’s debt crisis worsens, China’s economy will become slower. If that happens, commodity exporting nations that have reaped the benefits of China’s boom, like Australia, could struggle. It may result in steep falling in commodity price, and will force some exporters to adjust the prices.

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(Source: Ministry of Commerce Website)