Australia faces economic turbulence from U.S. meltdown: PM

SYDNEY (Reuters) - Australia, one of the best-performing advanced economies, faced looming economic turbulence from the subprime lending meltdown in the United States, Prime Minister John Howard warned on Sunday.

On Friday, Australian Treasurer Peter Costello had warned of an approaching international financial "tsunami", with China at its epicenter.

"We are entering a more difficult time of economic management. There are storm clouds on the international economic horizon," Howard told Channel 9 television on Sunday.

He was speaking on the campaign trail for Australia's federal election on November 24, which the coalition government is fighting largely on its economic credentials.

Battling poor opinion polls, Howard faces the prospect of an official interest rate increase by the Reserve Bank on November 6, during the election campaign.

"I don't think its panicking anybody to say that the subprime meltdown in the United States, which has already had an impact on market interest rates, because of the globalize nature of our economy, is going to have an effect," Howard said.

In an interview with the Sydney Morning Herald on Friday, Costello said global financial markets faced a "huge tsunami".

The U.S. economy would weaken in the wake of its subprime mortgage meltdown, and the breakneck pace of Chinese growth also could not continue, Costello said.

At some stage, likely to coincide with a move to a floating of the Chinese currency, China would unleash greater instability on global markets than the United States had, he said.