Economist never been as scared
EUROPE may be on the verge on the worst recession in decades and there is no guarantee that Australia's economy will not be affected.
That was the bleak economic outlook given by Westpac's London senior economist James Shugg, when he discussed the global economy with Rural Weekly CQ this week.
Mr Shugg said that in 25 years as an economist, he had never been as scared of what the future might hold then now.
He said: "Everything going on in Europe now. It's like watching a slow-motion train wreck happening. Every week, there is more bad economic news.
"And one of the biggest problems is that the policy-makers are only just starting to realise what is happening and they can't make enough changes quick enough to stop it."
Mr Shugg said the economic forecasts for Europe were "very distressing" and while it was not a certainty, there was a high likelihood of the current recession become more ingrained.
He and many economists like him have been predicting that the current fall of the entire European economy could have worse effects for all nations than the 2008 recession, which was spurred by the collapse of the United States banking system.
Mr Shugg said the effects of the current state of the European economy were already being felt in Australia, with a recent 40% drop in the international iron ore market, and he believed other hard commodities such as coal, a Central Queensland staple, would face significant drops in the coming months as countries including China slowed their economies to adjust to the global trading conditions.
He said if such a situation were to eventuate, it would then affect the millions of Chinese who were originally expected to cross over from low income to middle class - one of the most important markets for beef producers in Australia, due to the trend for increased protein consumption as people moved into higher income brackets.
Mr Shugg is one of several speakers who will address the Westpac Agribusiness "Knowhow' forum at Rockhampton next Wednesday.
He will go into more detail about how the goings-on in Europe's economy will provide challenges and opportunties for Australia's economy during his address.