The Souvlaki Country? That's the future for Australia according to an opinion piece in the UK's Daily Telegraph newspaper this morning that suggests tumbling commodity prices could spell a Greek-style debt blowout for the country.
Although if cricket is Australia's national sport, tax evasion is Greece's and some of the parallels drawn between the two countries in the article seem a little far fetched.
The article argues how precipitous falls in iron ore, coal and gold prices means Australia's trade deficit or the gap between the value of its exports and imports is now widening to a dangerous extent.
Although Australia's debt to GDP ratio has blown out to 60 per cent according to the article it's still significantly below pretty much all the other developed economies of the western world including the United States and United Kingdom for example.
The real problem for Australia's outlook is the possibility of a prolonged, or permanent downturn in commodity prices.
The other big problem is Australia's reliance on China, its largest trading partner and the world's second-largest economy that is starting to slowdown from its recently dizzying growth rates.
Still China is forecast to grow around 7 percent this year, although this has been insufficient to prevent the prices of commodities tumbling. The recent wild swings in its stockmarket also illustrative of the pitfalls over Australia's dependence on an economy that is liable to surprise, whether it be on the upside or downside.
For investors there are a couple of key takeaways if you are to give credence to the bearish outlook for the years ahead. First, avoid the materials and resources space as the basics of over-supply and slowing demand lead to a prolonged downturn in commodity prices.
Second, if you don't want to invest abroad directly make sure your portfolio is crammed full of businesses with growth potential and strong overseas exposure in markets such as the United States.
Some of my preferred options to buy would include healthcare giant CSL Limited (ASX: CSL), financial services innovator Macquarie Group Ltd (ASX: MQG) and shopping centre operator Westfield Corp Ltd (ASX: WFD).
