FED: Howard economic boast despite trade blowout

AAP General News (Australia)
12-02-1998
FED: Howard economic boast despite trade blowout

CANBERRA, Dec 2 AAP - Prime Minister John Howard has boasted that Australias economy
remains the strongest in Asia despite record foreign debt and another blowout in the current
account.

The Australian Bureau of Statistics reported yesterday that the current account deficit
ballooned by 20 per cent to a seasonally adjusted $7.3 billion in the three months to
September - the second worst result on record.

Net foreign debt also soared to a record $232.8 billion for the quarter.

But Mr Howard, boosted by figures showing retail trade rose 0.8 per cent, said Australia
remained the strong economy of Asia, with its capacity to repay foreign debt the best it had
been in more than 14 years.

"We have turned the fortunes of the Australian economy around," he told parliament. "The
strength of the Australian economy is demonstrated every day.

"It is no idle boast to say that the Australian economy is now without doubt .. the
economically strong economy of the Asia-Pacific region."

Analysts believe the Reserve Bank of Australia (RBA), which met yesterday, will hold off on
an interest rate cut before next year because of the rise in imports driving the current
account deficit.

"This is consistent with continued strong domestic demand," RBC DS Global Markets senior
economist Su-Lin Ong said.

The central bank last lowered rates by half a percentage point on July 30, 1997.

"We continue to think that they will wait for further domestic data to provide a more
compelling case to ease," Ms Ong said.

AAP sc/kr/de

KEYWORD: ECONOMY DAYLEAD

1998 AAP Information Services Pty Limited (AAP) or its Licensors.