BT Financial chief economist Chris Caton has argued that regularly cited threats to local and global economies are 'exaggerated', and Australia is in good position for the future.
At PLAN Australias national conference held in Darwin, the leading economist told the brokers that threats such as US double-dip recession and a potracted debt crisis in Europe were less important the they are often made out.
in regards to the US, Caton said that "you cant fall when you are alrady on the floor"
"the recession in 2008 was basically caused because a housing boom collapsed in 2006 - the bubble was blown up by sup-prime mortgages, and his led to the sub-prime mortgage crisis and the GFC", Caton said. "in the next three years, housing starts in the US fell 80% unbelievable, nothing remotely like that has happened before. they are not falling any more- they are not rising either - but they cant possible fall like they did before, and this is my point; there is nothing strong enough to get back to overall negative growth", he said.
While Caton said the Eurozone debt crisis "is a bit more complicated" and that the region as a whole may fall into some kin of weak recession it would not be a "game-changer".
"the three countries most affected - Greece, Ireland and Portugal - if you add up the size of those three economies, they are smaller in total then the state of Florida - I cant" he said.
Caton said the Euozone banking system can get affeced, but that leaders were working on that. However, he said that if the more sizable economies of Spain or Italy do become involved "that would be an isssue", and this would be decided by financial markets. He sai Greece would definitely default, and in some ways this was " already happening"
Caton was upbeat on the prospects for the Austrlian economy, saying it would resume strong groth led by mining investment.
He added that Novembers rae cut of 0.25% may be the first of "a couple" of cuts, due to downward pressures such as rising unemployment, 'benign' inflation and global worries.