Newspaper article The Morning Bulletin (Rockhampton, Australia)

Australia Slides towards Recession as Output Falls

Newspaper article The Morning Bulletin (Rockhampton, Australia)

Australia Slides towards Recession as Output Falls

Article excerpt

AUSTRALIA'S economy has contracted for the first time in eight years and is sliding toward recession as it faces a global threat that has already belted other industrialised nations.

Economists say the full impact of the global downturn will hit Australia this year, although the effects aren't expected to be as extreme because of the fiscal and monetary policy stimulus already in the system.

Real gross domestic product (GDP) fell by 0.5% in the December quarter, Australian Bureau of Statistics (ABS) data showed yesterday.

The outcome was below market forecasts for a 0.2% rise and an unrevised 0.1% growth pace in the September quarter.

On an annual basis, GDP grew by 0.3%, the slowest rate of expansion since the December quarter of 1991 when Australia was last in recession.

The last time the overall economy contracted was in the December quarter of 2000, when it shrank by 0.9%.

But after discounting the contribution from the farm sector, which accounts for less than 3% of GDP, Australia has now had two falls in a row.

Non-farm GDP fell by 0.8% in the December quarter after a 0.2% decline in the September quarter - which alone signal recessionary conditions.

"For all intents and purposes, the Australian economy has been confirmed to be in recession," Macquarie Group interest rate strategist Rory Robertson said.

During the 2008 December quarter, manufacturing fell 4.7% - the biggest fall in value-added production since 1982.

Household spending rose 0.1%, government expenditure was flat while dwelling activity contracted 1.2%.

Federal Treasurer Wayne Swan said the global economic slowdown had been "savage" but the Federal Government and the Reserve Bank of Australia (RBA) had acted quickly to support the economy.

"There is absolutely no doubt that things in this country would have been far worse had the government not acted when we did with the economic security strategy announced last October," Mr Swan said. …

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