Australia's biggest export market recently raised concerns when China suspended four Australian beef producers from exporting to China and then imposed a total 80.5 per cent fee on barley imports because of subsidies to its farmers.
While China has yet to take action on iron ore, its main export, it is likely to have a related impact on Australian exports if they fail to comply following recent changes in the way China regulates the import of iron ore.
Against this backdrop, there is yet another piece of bad news from Australia. Fitch ratings, one of the world's top three rating agencies, has cut its outlook on Australia's triple-a credit rating to negative, reflecting the country's slide into recession, foreign media reported on Friday. Foreign media said that fitch's move will lead to a serious deterioration of the country's financial situation.
increased government spending in response to the recent outbreak has resulted in a large fiscal deficit and a sharp rise in the country's debt ratio,' fitch said in a statement. In the past two decades, Australia has enjoyed a 28-year record of recession-free growth thanks to China's rapid economic growth.
However, economists now expect the economy to contract by 10 per cent in the first half of the year and the unemployment rate to soar to 10 per cent in June, even with the country's proposed JobKeeper plan. In addition to higher borrowing costs, the Australian dollar fell sharply against the U.S. dollar.