World Economy

Australian PM Warns of “Fragile” Global Growth

Australian PM Warns of “Fragile” Global GrowthAustralian PM Warns of “Fragile” Global Growth

The “fragile” global economic recovery has taken a major hit from the shock Brexit result, Australia’s Prime Minister Malcolm Turnbull has said, even as he sought to reassure Australians that a reelected coalition can weather gathering waves of instability.

Turnbull vowed to forge ahead with the government’s program of cutting new trade deals but effectively hosed down expectations that Brexit offers a swift opportunity to secure a separate deal with a newly independent Britain, AAP reported.

Appearing with Treasurer Scott Morrison a week out from the federal election–which polls forecast will be tight–Turnbull said the global economic recovery remained “somewhat fragile”.

“So the British decision to leave the European Union is not helpful in terms of the global economic recovery,” he said. “It is quite clear. It is a big economic shock. While it was clearly on the cards, I think markets generally expected the vote to go the other way … So, yes, it does pose a risk to investor confidence. It will increase risk.”

Seeking to tread a fine line between reassurance while also stressing that ditching the coalition government would add to uncertainty, Morrison acknowledged there would be a “period of uncertainty over several years” as Britain withdraws from the EU but called for Australians to remain calm.

He said he had spoken to the chief executives of the major banks, the Reserve Bank, the Australian Prudential Regulation Authority and Treasury on Saturday morning and was convinced the fundamentals of Australia’s financial system are sound.

“Australia is well placed and well prepared for the situation that we now face and that is not by accident,” he said.

The prime minister and treasurer played down expectations–raised in some quarters–of any immediate opportunity for a favorable free trade deal with Britain, stressing that the new British government would have a lot of work ahead of it just to get out of the EU and reestablish itself as a separate trading nation.

Turnbull said a “lengthy process … needs to be undertaken for Britain to disentangle itself from the EU and then re-entangle itself as a separate, politically separate, nation”.

“So the complexity of this is not to be underestimated,” he said.

But he said Australia would continue to pursue trade deals with both Britain and the EU, adding that Australia had strong relationships with Germany and France.

Turnbull emphatically backed the government’s fervent pursuit of free trade deals, which he said were a key pathway to growth as the nation’s economy faces a significant transition in the years ahead.