Market turmoil not a major economic threat…yet

The sharp falls in equity prices since the turn of the year are unlikely to prompt households or businesses to rein in their spending. In fact, when set against some measures of domestic activity, it looks as though equity prices may have fallen too far. That said, Australia and New Zealand are more vulnerable to a significant slowdown in China than most other advanced economies. This comes at a time when each economy appears to have lost a little momentum at the end of last year.