Mining boom to leave economy stranded if prices fall, says BlueScope's Kraehe
AUSTRALIA'S economy risks being hollowed out by the country's mining boom and faces the prospect of a downturn once commodity prices fall, Reserve Bank of Australia board member and BlueScope Steel chairman Graham Kraehe said today.
But the country's financial resources are insufficient for it to follow the examples of Switzerland and Japan and intervene in the currency market to suppress the booming Australian dollar, which is therefore likely to stay well above historical rates for an extended period, he said.
"When the mining boom ceases - and it will - do we really want to be left with a hollowed-out economy? Obviously we don't," Mr Kraehe said in an interview with Dow Jones Newswires. "If you look at the 1970s and 1950s, Australia had terms of trade that were right up high. Those booms ended in recession and this one is a bigger and longer boom."
BlueScope, the country's second-largest manufacturer by revenue, today announced it would close its export business and shed 1000 jobs, due in part to the strength of the Australian dollar and raw materials prices, the latter being a major contributor to the local currency's strength.
BlueScope, the country's second-largest manufacturer by revenue, today announced it would close its export business and shed 1000 jobs, due in part to the strength of the Australian dollar and raw materials prices, the latter being a major contributor to the local currency's strength.