We have talked about the vulnerability of the Australian economy due to its exposure to heavy mining materials before, as we expect Chinese demand to slow down. There are significant issues with the Australian economy due to over-inflated housing prices, and an extremely strong currency which crimps exports. The decade long mining boom has propelled economic growth to one of the fastest rates among the developed economies but if mining slows, housing could get much worse. I’d be very wary buying the Australian banks because many homes were bought with high mining-related incomes, that could be reduced or eliminated if some of the larger planned projects start being shelved.
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