AUSTRALIA SHRUGS OFF STOCK MARKET PLUNGE

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PORT MORESBY, Papua New Guinea (PNG Post-Courier, Mar. 1) - Australia is well braced to deal with shocks from slumps in world stock markets, Treasurer Mr. Peter Costello says.

Costello said yesterday movement on global markets and the Australian stock market, triggered by events in the Peoples’ Republic of China, showed how global markets were all inter-connected.

[PIR editor’s note: Stock markets around the world plunged earlier this week – by 416 points in the United States and 158 points in Australia – to record lows. According to the International Herald Tribune, the global slump was triggered by a nine percent drop in mainland China's two major bourses in Shanghai and Shenzhen. Both rebounded sharply Wednesday, rising nearly 4 percent after state-controlled media reported that the government might allow greater foreign investment in Chinese stocks and would not impose capital gains taxes on stocks soon. ]

Costello said he had spoken before how external shocks could put pressure on the Australian economy.

"That is why we run an economy which is focused on growth, employment, balanced budgets and low debt to make sure that we can withstand external shocks coming from other parts of the world," he told reporters. "I would expect that following events in China there will be volatility on equity markets for some time. But Australia, being one of the strongest performing economies in the world of course, it is well braced to deal with those shocks which may be coming from overseas."

Prime Minister John Howard says Australians should not be spooked or panicked over today's huge stock market fall.

"You have to accept that when an economy is growing as strongly as China's economy is growing, from time to time there will be corrections," Mr. Howard told Sky News yesterday. "But the fundamentals of that economy are very strong and importantly the fundamentals of the Australian economy are remarkably strong.

Howard said the Government was running a strong economy so that "variations" such as this could be absorbed.

"Australians certainly shouldn't be spooked or panicked," he said.

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