Australia’s Finance Minister Downplays Threat of Trade Warsby and
Australia’s Finance Minister Mathias Cormann said he doesn’t expect an all-out trade war between the U.S. and China and is pushing ahead with the Trans-Pacific Partnership despite incoming U.S. President Donald Trump vowing to kill it.
“We don’t believe there’ll be a trade war, we don’t believe there should be a trade war,” Cormann said in an interview with Bloomberg Television’s Francine Lacqua in Davos on Friday. “We are very committed to TPP” and “there’ll be conversations to be had in relation to this, not only with the U.S.,” he said.
Australia has much to lose from deteriorating relations between the world’s top two economies. The U.S. is the largest investor in Australia, while China is its biggest trading partner, said Cormann.
Trump’s focus on making the U.S. economy strong is “going to be good for the world, is going to be good for Australia,” he said.
Australia’s economy probably didn’t contract in the fourth quarter after shrinking 0.5 percent in the third quarter, Cormann said. The government is committed to returning the budget to a surplus position by 2021 and values its AAA rating, he said.
The nation faces the prospect of a downgrade after S&P Global Ratings put its debt on negative outlook in July. Australia’s struggle to balance its books has been complicated by recession-level wage rises and weaker growth as the economy adjusts to the end of a mining boom.
The economy’s contraction in the third quarter was the first in more than five years, surprising both policy makers and economists. The Australian dollar also isn’t going the government’s way, gaining 4.4 percent against the greenback so far this year, hurting currency-sensitive services industries such as education and tourism.
Cormann declined to comment on the currency, saying “it is what it is.”