New Treasurer Chris Bowen has warned Australia faced an uncertain economic outlook that will require “careful management”.
The Age reports Bowen, who replaced Wayne Swan following Kevin Rudd’s return as prime minister, said commodity prices were starting to slide and mining investment was turning down.
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“We are seeing a transition from the investment phase of the mining boom to the production phase,” Bowen says. “Managing the transition and dealing with the decline in our terms of trade will require very careful management in the coming months and years.”
Sharemarket rallies to recover losses
The Australian sharemarket posted its biggest one day gain in almost two years on Tuesday, reversing large losses on Monday.
“There’s a better growth outlook for the globe and a better outlook from the Reserve Bank,” The Australian reported CMC Markets chief strategist Michael McCarthy saying.
The broader sharemarket gained more than $34 billion in value in what was the largest one-day rise since October 2011.
McCarthy says the market had regained all of Monday’s losses, which had been caused by worries about manufacturing in the world’s major economies, but data from the US and Europe overnight had painted a more optimistic picture.
US economic data points to pick-up in economy
US new motor vehicle sales in June were poised to record their strongest month in more than 5-1/2 years and factories posted a second straight month of gains in new orders in May, indicating some pick-up in economic activity, Reuters reports.
Home prices also posted their biggest annual increase in more than seven year in May, adding to an improving economic picture.
“We are in a transition stage of the economic recovery, moving away from exports and government to private domestic demand, which would make this recovery sustainable,” said Brett Ryan, an economist at Deutsche Bank in New York.
The Dow Jones Industrial Average closed down 0.28% at 14,932.41 points. The Australian dollar is down 0.01% at US91.44 cents.