‘Australia will have a recession,' former Greek finance minister

Due to the importance of China to Australia’s fortunes, the slowdown there will send Australia into a ‘necessary recession’, according to former Greek finance minister Yanis Varoufakis.

Speaking to Fairfax Media, Varoufakis said: "There will be a recession in Australia, because of the collapse of investment and because of the collapse of animal spirits – and this is because of what's happening in China.”

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Varoufakis said China was "not at the stage of development where it can continue to defy the global deflationary atmosphere".

"The recession itself [in Australia] would not be the problem," he said, "because some recessions are necessary.

"Some recessions are a bit like bush fires that clear out the forest, and help with the regeneration.

"The fear would be that this is something more secular, something more like stagnation, and a systemic crisis.

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"I'm not saying that is going to happen, but if I were a politician here, this is what I would be worried about,” Varoufakis added.

You can read the original Fairfax Media article here.