Hockey: The yuan’s devaluation is welcome.

Bloomberg/Ankara

Concern over the slowdown of China’s economy is overblown, and the yuan’s devaluation is welcome, according to Australia’s treasurer.
Australia’s economy “will be able to cope with what happens in China, or particularly in other parts of the world, as long as it’s not a global-wide phenomenon,” Joe Hockey said yesterday in an interview at the Group of Twenty meeting in Ankara. China is “learning how to manage volatility, as reflected in their equities market.” “We can cope with a currency that continues to fall, because it’s going to empower our exporters,” Hockey said. He declined to comment on a particular level for the Australian dollar, which earlier yesterday fell to the lowest in six years against the US dollar.
Australia’s economy expanded in the last quarter at half the pace forecast, only propped up by government and household spending. Yet Hockey is relying on a projected rebound in growth to 3.5% in fiscal 2018 and 2019 – a level unseen in six of the past seven years – to compress a fiscal deficit. That forecast was made before China’s recent market turbulence.
 “We think our forecasts are about right at the moment,” Hockey said. “What we’re seeing is pretty strong employment growth” even in the wake of economic expansion not returning to the trend growth rate, he said.
The fiscal deficit in the year through June 2016 will be A$35.1bn, or 2.1% of gross domestic product, according to government estimates.