Curse of a Strong Currency: Australia’s Growth Stalls

In a world of competitive devaluations, Australia is now the poster child of why countries are fighting to keep their currencies cheap.  The government announced Q3 GDP grew just 0.2 percent, bringing down the annual growth rate from 3.3 percent to 2.7 percent.  Growth in the quarter was the weakest in over two years.   Housing investment slowed due to the Reserve Bank of Australia’s interest rate hikes, which also led to a 25 percent appreciation of the Australian dollar from June to November.   Consequently, exports were hit relatively hard, falling 2.4 percent in quarter.

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