Regional and rural Victorian communities could face economic uncertainty unless the United States negotiates a deal to solve its mounting debt crisis, a Deakin University lecturer has warned.
Dr Geoff Robinson, a lecturer from the Geelong Campus who specialises in Australian and US politics, said financial stability in the United States was crucial to local prosperity.
“The United States, not forgetting India and China, is still one of our major trading partners and any depression of the US market could be felt here,” he told Fairfax.
Dr Robinson’s warning follows an address to the nation by US president Barack Obama, streamed live over the internet today at 11am (AEST).
Dr Robinson said Victorians could find it harder to borrow money from banks and other lending institutions.
“Financial markets are all interconnected these days. We saw that with the global financial crisis.
“Banks are global players – they don’t just rely on Australians putting money into their accounts to sustain themselves.”
Politicians in the US need to strike a deal by August 2 to allow the country to raise its ceiling on debt above the $14.3 trillion already owed or risk default.
“Whatever the current woes of the US are, people have – up until now – seen the US government as a safe investment,” said Dr Robinson.
“People have been saying “of course it’s going to happen, of course they’re going to be able to borrow more” but it’s not looking quite as likely … it’s throwing the confidence of the global financial community.”
Tourists from the US rank in the top five who visit Australia, based on numbers and the amount of money they spend, according to the Department of Foreign Affairs and Trade (DFAT).
The US is also acknowledged by DFAT the largest investor in Australia.
For some, there was one potential positive, according to Dr Robinson.
“The rising Aussie dollar makes it harder for people from overseas to afford properties here which could please some rural communities which are worried about foreign investment,” he said.
Follow @FairfaxVIC on Twitter.