Global economic shift ‘a good thing’, Prime Minister Malcolm Turnbull tells Americans

Australian Prime Minister Malcolm Turnbull meets Federal Reserve chairwoman Janet Yellen and Treasury Secretary Jacob Lew in Washington. Photo: Supplied China on their minds: Malcolm Turnbull meets Janet Yellen, chairwoman of the Board of Governors of the Federal Reserve Bank in Washington. Photo: Supplied


IMF warns global growth could be ‘derailed’ over the next two yearsPrime Minister Malcolm Turnbull greeted warmly by Barack ObamaChina’s growth rate falls

The global economic transition worrying world markets is ultimately “a good thing”, Australian Prime Minister Malcolm Turnbull has told a Washington audience.

In a speech to the US Chamber of Commerce on Tuesday, Mr Turnbull said China’s struggle to switch from an export- and investment-based economy to one that is more consumer focused was “bumpy.”

Nevertheless, “this rebalancing has to happen”, he said.

“It is overwhelmingly a good thing.”

The future of the Chinese economy was also the focus of meetings between Mr Turnbull and the chairwoman of the United States Federal Reserve, Janet Yellen, and the Treasury Secretary, Jack Lew, on Monday.

Officials from both camps expressed confidence in the underlying Chinese economy, but noted that inconsistency in financial market regulation and government messaging to investors over the past six months had contributed to the instability and damaged investor confidence.

The focus on China during Mr Turnbull’s meetings in Washington comes as the International Monetary Fund surprised economists by downgrading forecasts for global growth.

The international institution also warned that growth around the world could “derail” in the next years if developing economies, such as China’s, don’t successfully manage the transition to a more consumption based economy.

The IMF pointed to China’s difficulties in reforming its economy, the plunge in commodity prices, and rising US interest rates.

China’s latest growth statistics have failed to reassure, as well. GDP figures released this week show the slowest growth in 25 years.

China’s seemingly insatiable demand for coal, iron ore and other commodities helped Australia sail through the global financial crisis of 2008. With commodity prices tanking more recently, there is a risk the weakness will flow through to Australia’s domestic economy.

Australia’s over reliance on export revenues from commodities has prompted Mr Turnbull to embark on a policy to lift Australia’s “innovative” capacity to spur new non-mining businesses.

Innovation and technology is an area of shared interest between Mr Turnbull and Mr Obama.

Mr Turnbull visited a technology start-up in Washington on Tuesday.

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