DTN News - DEFENSE NEWS: Australia Continues To Boost Its Military, With The Purchase Of 12 New Submarines A Part Of A US$44Bn Upgrade....NSI # 1521

DTN News - DEFENSE NEWS: Australia Continues To Boost Its Military, With The Purchase Of 12 New Submarines A Part Of A US$44Bn Upgrade....NSI News Source Info # 1521

Source: DTN News - - This article compiled by Roger Smith from reliable sources Research and Markets On Friday January 28, 2011, 4:00 pm EST

(NSI News Source Info) TORONTO, Canada - January 29, 2011: Australia's relationship with China has become increasingly important in recent years, owing to China's emergence as Australia's biggest export destination, having overtaken Japan. Australia has traditionally been a very close ally of the US, but Canberra must increasingly tread a fine line between fostering closer economic cooperation with Beijing while guarding against China's rising military power. The Australian government has continued to boost its military capabilities, with the purchase of 12 new submarines as part of a US$44bn upgrade plan.

Canberra has also made efforts to increase regional military cooperation potentially as a hedge against China by signing a security pact with Japan. In light of Australia's longstanding security ties with the US, some Chinese strategic planners may interpret three-way defence cooperation between Canberra, Tokyo and Washington as being aimed at curbing Beijing.

The slowdown in Australia's real GDP growth in Q310 is in line with our bearish view that weakening investment and private consumption growth will cause a drag in headline expansion going forward. Indeed, we are pencilling in economic growth of only 1.6% and 2.3% for 2011 and 2012 respectively, weaker than the forecast 2.8% expansion in 2010.

Australia's economic growth decelerated considerably in Q310, expanding by only 0.2% quarter-on-quarter (q-o-q) (seasonally-adjusted), from a revised 1.1% registered in Q210. The recent slowdown in the country's real GDP expansion was in line with our view that the rise in borrowing costs, fall in consumer confidence, and weakening residential property sector will lead to lower headline growth going forward. With this in mind, we maintain our view that the Australian economy will expand by only 1.6% in 2011, before rebounding slightly to 2.3% in 2012. These figures are much lower than our projected 2.8% growth for Australia in 2010

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