Aust, eyes on U.S.

Press, 10 February 1988, Page 39

Aust, eyes on U.S.

By

RON CORBEN of AAP

(through NZPA) Sydney The fate of the Australian economy in 1988 rests on the extent of the slowdown in the American economy in the wake of the October sharemarket crash, according to two leading economists. Mr Ray Block, of Dominguez Barry Samuel Montagu, Ltd, and Mr Warren Bird, of Lloyds Bank NZA, Ltd, agree that Australia’s economy will be guided by the American economy’s performance. But the economists differ about whether the American economy has already begun to slow or whether the full impact of the share slide is still to be felt. A downturn in the American economy is expected to lead to reduced international demand for goods and commodities. But the U.S. Administration is hoping lower American growth will be

countered by higher growth in Europe and Japan. Mr Bird believes the risk to Australia’s economy comes from the prospect of slow growth or recession overseas, particularly in the United States, rather than from domestic sources. Mr Bird said the U.S. central bank, the Federal Reserve System, was still receiving reports which showed a “reasonably solid picture of recent industrial conditions.” "Most regions in the United States were reported to be growing moderately, with manufacturing activity still quite strong,” he said. Several Federal Reserve governors were aware of the need for the economy to grow more slowly to reduce import demand. Mr Block, however, believes the U.S. economy has already slowed.