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Morrison Govt talks up economy, downplays recession fears

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The Morrison Government says it will take all necessary actions to keep Australia’s economy afloat, amid fears of an impending recession in the United States.

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Two of his cabinet colleagues have also sought to ease people’s nerves about the potential of a downturn at home, saying the fundamentals of the Australian economy are strong.

The Australian share market shed more than $63 billion on Thursday in response to fears of a recession, marking its worst day in 18 months.

The global rout came after the US bond yield curve inverted for the first time in more than a decade.

The trend – when long-term bonds start earning less interest than short-term ones – has preceded every American recession in the past 50 years.

The ASX opened today to little change, after the previous day’s global sell offs were followed by a mixed session on Wall Street.

The benchmark S&P/ASX200 index was up 2.9 points, or 0.05 per cent, to 6,411.0 points at 1030 AEST on Friday, while the broader All Ordinaries was up 2.6 points, or 0.04 per cent, to 6,493.4 points.

Telecommunications shares fell by 1.33 per cent in the first half hour of trading and were joined in negative territory by the mining and energy sectors.

“We will continue to closely monitor global economic events and will take the necessary actions to ensure our economy continues to grow to the benefit of all Australians,” Frydenberg said on Friday.

“Australia is not immune from the fallout of these trade tensions and we are certainly not complacent.

“But with strong foundations our economy is positioned as well as any nation to withstand these challenges.”

Trade Minister Simon Birmingham stressed Australia was facing uncertain times amid the trade war between the US and China, upheaval in Hong Kong, uncertainty about Brexit and tensions between Japan and Korea.

“But the Australian economy continues to show a high degree of resilience,” he told Nine’s Today Show.

Frydenberg pointed to the latest jobs figures, with 41,000 new jobs created in July, despite the national unemployment rate remaining at 5.2 per cent.

However, South Australia’s seasonally adjusted jobless rate jumped from 6.0 per cent to a two-year high of 6.9 per cent – the highest in the country.

The nation’s underemployment rate remained steady at 8.4 per cent. The Australian Bureau of Statistics defines “underutilised labour” as those not working but who want to work, or those who are employed but want to work more hours.

Frydenberg said the government’s tax cuts and $100 billion in spending on infrastructure over 10 years would help keep the economy ticking along.

Labor frontbencher Tony Burke said the government needed to bring forward some of its infrastructure spending.

“A whole lot of the projects they promise don’t even happen this term,” he said.

He said there were also structural problems with the economy such as an alarming number of unemployed people or those wanting more hours.

“You can’t use the international circumstances as cover for the fact that structurally we do have some weaknesses in Australia now.”

US President Donald Trump defended his handling of the US economy and trade war with China as recession fears cast doubt on his central re-election claim – that he has made the economy great again.

Trump told a rally in New Hampshire on Friday that his trade pressure tactics are working on China, even though the two sides remain far apart on a deal, with talks scheduled for September.

He said Chinese currency devaluations are “going to hurt them badly” over time and force Beijing to make concessions.

“They’re going to make a deal,” he said.

Many analysts believe the tariffs he has imposed on Chinese products are responsible for a slowing of the US economy because the increased costs are being passed on to American consumers. But Trump disagreed.

“They’re eating the tariffs, by the way,” Trump said of the Chinese. “There’s no price increase.”

He blamed the economic woes on Federal Reserve Chairman Jerome Powell’s hesitation to cut interest rates: “Jay Powell should be cutting rates,” he said.

Warning of policies that would lead to tax increases if a Democratic candidate beats him in November 2020, Trump said the markets would have crashed if he had not won in 2016 and would do so again if he were defeated in 2020.

He claimed that Americans retirement accounts would ‘go down the tubes’ if he lost the presidency.

“Whether you love me or hate me, you’ve got to vote for me,” he said.

-with AAP

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