Australia Joins in the Recession Despite Lack of Acknowledgment by Aussie Leaders
As recently as Monday, the Reserve Bank of Australia kept its benchmark cash rate unchanged at 3.25%, suggesting that it had already done enough to keep the Australian economy out of the worst clutches of the sprawling global recession, than not a day later official government data shows that the country contracted 0.5% during the final three months of 2008, and finished the entire year up with merely 0.3% growth, showing that the Australian economy was already fumbling and stumbling about into eventual recession well before official quarter on quarter growth turned negative.
Broker News:AMP calls it: we're in a recession
The Australian economy is "effectively" in a recession, according to AMP's chief economist Shane Oliver.
Oliver made the call after GDP fell 0.5% in the December quarter. He said it would have been worse were it not for the government's economic stimulus efforts.
Technically, a recession only becomes official following two quarters of negative growth, but Oliver said "for all intents and purposes Australia has entered recession".
Oliver said the recession probably has another 6 to 12 months to run.
"The global slump has yet to really hit our exports and leading indicators are continuing to slide. On average, Australian recessions last approximately 12 months," he said.
Oliver said unemployment was likely to rise to 7% by year end, before peaking next year at around 9%.
He described the recent "up-tick in the housing market" as a "false dawn before more weakness" and said company profits were likely to fall 20 to 30% this year.
Further rate cuts are expected - Oliver said Tuesday's rate hold by the RBA was "premature".
On the positive side, Oliver said the absence of housing oversupply, the fall in the Australian dollar and quick stimulatory action by the government should mean that the recession in Australia will be milder than that already underway in most other developed countries.
Broker News:AMP calls it: we're in a recession
The Australian economy is "effectively" in a recession, according to AMP's chief economist Shane Oliver.
Oliver made the call after GDP fell 0.5% in the December quarter. He said it would have been worse were it not for the government's economic stimulus efforts.
Technically, a recession only becomes official following two quarters of negative growth, but Oliver said "for all intents and purposes Australia has entered recession".
Oliver said the recession probably has another 6 to 12 months to run.
"The global slump has yet to really hit our exports and leading indicators are continuing to slide. On average, Australian recessions last approximately 12 months," he said.
Oliver said unemployment was likely to rise to 7% by year end, before peaking next year at around 9%.
He described the recent "up-tick in the housing market" as a "false dawn before more weakness" and said company profits were likely to fall 20 to 30% this year.
Further rate cuts are expected - Oliver said Tuesday's rate hold by the RBA was "premature".
On the positive side, Oliver said the absence of housing oversupply, the fall in the Australian dollar and quick stimulatory action by the government should mean that the recession in Australia will be milder than that already underway in most other developed countries.