Australia says can cope with worst world can throw

SYDNEY: Australia said Monday its economy could cope with the worst the world can throw at it as stocks hit 25-month lows after Standard & Poor's cut the United States' credit rating for the first time.

Treasurer Wayne Swan said he had been consulting regularly with Australian regulators and finance ministers from the G20 group of advanced economies over the global turmoil.

He also spoke with under-pressure US Treasury Secretary Timothy Geithner on Sunday night.

"We talked about the need for us to coordinate what we do and to work together," he said of the Geithner talks.

Swan pointed to an IMF report over the weekend that endorsed Canberra's economic management and said Australia's outlook was favourable, largely because of strong demand for commodities and investment in mining.

"Yesterday's (IMF) report points to the fact that our economy has been very well run. Because of that we are in a very good position to cope with the worst that the world can throw at us," Swan told ABC radio.

"What we have got to do is closely observe these events as they unfold in Europe and the United States.

"What Australians can have confidence in is the fact that we are in the strongest part of the global economy, the Asia-Pacific, and our strength here, particularly in Australia, is far stronger than just about any other developed economy."

Swan rejected suggestions that the government's plan to return to surplus in 2012/13 was increasingly uncertain because of the slump in growth.

"The global situation will make things more difficult but the government remains committed to delivering our surplus as planned," he said, adding that it was too early to talk about a global financial crisis mark II.

"I think we'll cross that bridge if we come to it. I think it is very early to be making that sort of judgement," said Swan.

While Australia largely weathered the first financial crisis, the economy has hit some turbulence in 2011 and the central bank slashed its 2011 growth forecast Friday from 4.25 percent to 3.25 percent.

Investors have become increasingly jittery, with Standard & Poor's docking of the United States' rating from AAA to AA+ with a negative outlook late on Friday adding to the worries.

It was reflected in Australian trading with stocks closing 2.91 percent lower, falling below the psychologically significant 4,000-point mark to 3,986.1 -- levels last seen in July 2009.

"Investors are moving from crisis resolution to the next disaster without pausing for breath," said CMC Markets chief strategist Michael McCarthy.

Copyright AFP (Agence France-Presse), 2010