Friday, March 9, 2012

S&P Scenarios for China's Impact on Australia

Hard or soft, China's landing to dent Aussie houses
A new S&P report has claimed a soft landing in which China experiences 8% GDP growth could see Australia's house prices eroded by more than 5% in 2012. A doomsday scenario in which China saw 5% GDP growth could see Australia sent into a recession, with house prices falling 20%.
S&P analysts Craig Parker and Vera Chaplin predicted a soft landing was the most likely scenario for China, saying the effect on Australia was likely to be "muted".
. . .
The second-most likely scenario, Chaplin and Parker said, was a "medium" landing in which Chinese GDP growth fell to 7%, shaving 10% of Australian house prices and sending unemployment to 7.2%. The analysts gave this scenario a 25% likelihood of occurring. The hard landing scenario would see unemployment swell to 11.3%, but S&P said there was only a 10% probability this scenario would come to pass.

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