China’s economic recovery is a sign that global demand will improve this year, Australian Treasurer Wayne Swan said.
“I’m optimistic that 2013 will be a better year for the global economy,” Swan said in his weekly economic note before a visit to Hong Kong where he will address the Asian Financial Forum. “One cause of optimism is recent evidence that China’s economy appears to be stabilizing after economic conditions moderated in 2012.”
China’s exports rose more than forecast in December and a broad measure of credit surged 28 percent, adding to signs that the recovery in the world’s second-largest economy is gaining traction. The nation’s new leaders are seeking to sustain a pickup in growth after a seven-quarter slowdown.
Economic growth in China probably accelerated to 7.8 percent in the fourth quarter from a year earlier, up from a three-year low of 7.4 percent in the previous period, according to the median estimate of analysts surveyed by Bloomberg.
“The global economy remains hostage to two familiar downside risks, the fiscal situation in the U.S. and the ongoing sovereign debt crisis in Europe,” Swan said in the e-mailed statement. Still “both sides of the Atlantic have recently made encouraging progress in dealing with these challenges.”
The U.S. reached its debt ceiling Dec. 31 and, without an extension of the spending limit, the Treasury will exhaust measures to finance the government as early as mid-February, according to the Congressional Budget Office. Moody’s Investors Service warned Jan. 2 that further measures to control the deficit were needed to support the nation’s top Aaa rating.
“Uncertainty remaining around their debt ceiling, unresolved spending cuts and the sustainability of their budget in the long term means the U.S. has a lot more work to do to restore confidence,” said Swan. “Anything less than a comprehensive deal which addresses all these issues will have a lasting impact on the global economy with substantial damage having already been done.”
There is also a “burning need” for economic growth and job creation in Europe, he said.
Australia is looking for a global recovery to sustain exports and extend 21 recession-free years as a resource investment boom is predicted to peak. Swan last month said the government is unlikely to deliver a pledged budget surplus this fiscal year as weaker growth and a strong local currency curb tax receipts.
Australia’s economy received a boost in recent months as the price of iron ore, the nation’s most valuable export, surged to a 15-month high, reflecting expectations of faster growth in China. Australia will continue to look to growth in Asia as a means of boosting its economy, Swan said.
“As the economic weight of the world continues to tilt toward Asia, we are in the box seat to take advantage,” he said. “While Australia is in the right place at the right time, we can’t assume a prosperous future will simply happen for us.”
In Hong Kong, Swan will confer with Financial Secretary John Tsang, and meet investors and Australian business leaders. He will promote greater use of China’s renminbi currency in international trade and finance, he said in a statement.
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