Australian voters have an almost pathological fear of a growth slowdown in the Lucky Country.

Julia Gillard wasn't sunk by sexism. She was sunk by economics.

That's not to say Australia's first female Prime Minister didn't have to battle some dreadful misogynistic rubbish, but in the end she got rolled for the same reason political leaders always get rolled.

The Australian Labor Party was on track for a drubbing in the election, it still is. And the reason it is probably going to lose is also age-old. People vote with their pockets.

Yes, we are still talking about one of the world's richest nations.


Australia hasn't had a recession for almost 22 years and hasn't had to bite the bullet on economic reform the way most other Western economies have.

But a side effect of that is an almost pathological fear, among voters, of any kind of slowdown in growth.

After being buffered from the global financial crisis by the commodity boom, Australia now finds itself to be one of the most vulnerable economies in the world as China looks to pare back its growth.

There have been some big blows to the Australian psyche this year. Ford stopped manufacturing there - it was the end of the line for the Falcon. Holden is hanging on for grim death.

Australia's economic slowdown is already starting to hurt New Zealand companies.

Take a look at the hammering listed retailer Pumpkin Patch took after revising down its earnings outlook on Friday. Shares in the children's clothing company - which has big exposure across the Tasman - slumped nearly 13 per cent.

Pumpkin Patch's statement to the NZX was pretty specific. The year had been tracking as expected until five weeks ago there was a significant shift in the Australian market "with major retailers entering end of season sales much earlier and far more aggressively than normal".

Retail tells a powerful story in a modern consumer economy, it is the front end.

But Pumpkin Patch isn't the first NZX company to warn on Australian earnings - it follows Nuplex, Fletcher Building and Hallenstein Glassons.

Australians are worrying about GDP growth falling to to 2.5 per cent - the same level of growth New Zealand experienced in the year to March.

It's all relative, of course - the world is panicking about China slowing its growth to 7.5 per cent.

There is no doubt sentiment plays a big part in assessing an economy. Accelerating growth is cause for optimism and decelerating growth is not.

Bearing in mind that Australia's GDP growth figure is still propped up by mining activity in Queensland and Western Australia, the current slowdown in China is a serious worry. The NSW and Victorian economies are already flat.

The price of gold has fallen 30 per cent since the start of the year. Around the world mining companies are pulling back fast on production.

Gold slumped again on Friday to close at US$1200 an ounce, a level at which analysts say many gold mines around the worldcan't cover production costs.

In New Zealand OceanaGold has just announced it will mothball its Reefton mine by 2015.

We're seeing the slowdown reflected in immigration statistics - with May figures showing the lowest numbers of Kiwis moving across the Tasman since 2010.

Most of our economic exposure to Australia is not in the listed company sector.

It is through hundreds of smaller businesses that export across the Tasman every week.

The impact of reduced Australian spending is less obvious but no less serious for those whose jobs may be at risk.

Some analysts believe Australia will go close to recession this year or at the very least the domestic, consumer-driven end of the economy will.

It's not like the country is going to become poverty-stricken overnight. Australian households are buffered by fantastic savings rates.

There are hopes the mining slowdown will be temporary but that is predicated on China managing a soft landing for its economy.

Manufacturing data out of China has been weaker than expected for several months.

The Government is walking a tightrope trying to curb lending on the one side and facing a credit crunch on the other.

Markets have been extremely volatile and that looks set to continue. The ASX with its heavy weight mining stocks is more directly vulnerable than the NZX but, as we are seeing, those companies with Australian exposure are getting hurt.

The Australian and New Zealand dollars have also fallen sharply as the US economy rebounds - that will help exports but in the short term consumers will feel less well off as the price of imported good rises.

New Zealand companies are vulnerable to the prospect of the Aussie falling further than the kiwi and our goods becoming more expensive in Australia.

There was much excitement when China surpassed Australia as our largest trading partner in March.

We have a privileged position as a food exporter to China but our economy is so heavily entwined with Australia that it still dominates.

When the GFC hit, New Zealand sheltered in the glow of Australia's rock- solid banks.

Now as Australia feels a mid-winter chill, we can be sure we'll feel it too, no matter who is in charge of the Lucky Country.

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