The slowdown in China and end of US monetary tapering will be a pressure point for Australia’s economy, according to Dr Adrian Blundell-Wignall, special adviser to the secretary-general on financial markets at the Organisation for Economic Co-operation and Development.
Speaking at the Institute of Chartered Accountants Australia’s Business Forum in Melbourne, Mr Blundell-Wignall said there has been a huge super highway built into investing in emerging market credit.
“But the thing about this super highway is there isn’t a dual carriageway: when the money wants to come flooding back the other way and people want to get out, there’s no road there,” he said.
“This will lead to volatility in the illiquid asset class.”
The Institute of Chartered Accountants' head of leadership and advocacy, Rob Ward AM, said Australia must not become reliant on this path to continued growth.
“The structural shift taking place in the global economy, particularly in the context of business modelling, is dependent on defining market position, goals and objectives,” he said.
“It is important for businesses to invest time in planning and forecasting. This may include reviewing financial systems right down to planning for the short- and long-term future.
“Businesses must be able to be agile, particularly if they want to participate and compete in the global market, but also to deal with market changes,” Mr Ward said.
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