China is a major buyer of Australian iron ore, which is used to make steel. Photo / File
China's worst economic slowdown in 25 years will hit Australia as iron ore prices tumble, says the World Bank.
One of the bank's top economists says a more severe moderation is possible in the economy of Australia's biggest trading partner.
Australia's growth pace had deteriorated sharply since the first quarter
of 2014 as declining prices for key export commodities depressed mining investment, the World Bank noted.
China's growth in 2014 was the weakest since 1990 but the bank says things are set to get worse - just a month after the Chinese Government cut its growth target to 7 per cent.
"The significant negative impact on Australia and New Zealand, among the world's largest commodity suppliers, would lead to indirect spillovers on the Pacific Island countries, given their tight links through trade, investment and aid," its East Asia and Pacific Economic Update report predicted.
