Australian PM challenge will hinder policy agenda

Significance

Although a victory in the short term for Abbott, the narrow margin will only intensify doubts about his long-term prospects as party leader and as prime minister. The challenge continues a trend of instability across Australia's main political parties. The country is poised to enter a record 25th year of uninterrupted economic growth, yet has changed prime minister four times since 2007.

Impacts

• Australia will remain one of the most robust developed economies throughout 2015, with growth rates far above those of the EU.
• The Reserve Bank's decision to cut interest rates indicates that there are worries of the impact of the China-induced mining slowdown.
• Concerns in state capitals about housing bubbles will grow and may be an issue in the next federal election.