No Recession for Australia!
The Australian economy expanded by 0.4 per cent in the March quarter after contracting by a revised 0.6 per cent in the December quarter.
The Australian economy out-performed all other industrialised nations in the quarter by a big margin.
No state government is officially in recession once exports and imports are taken into account.
CommSec expects the Australian economy to rebound far quicker than Federal Treasury. In 2008/09 the economy will probably grow by only 0.6 per cent, but 2.1 per cent growth is tipped for 2009/10 and 4.1 per cent growth is expected in 2010/11.
What does it all mean?
In may not spark dancing in the streets, but it is clearly good news that the economy has avoided recession. Because this downturn has been all about confidence. If consumers and businesses become confident about spending and hiring again then recovery should be a lot quicker and stronger than most analysts thought possible just a month ago.
Is Australia the wonder from down under? It certainly looks that way. Every other major developed economy went into reverse in a big way in the first three months of the year but Australia actually grew. Much of the credit for Australia’s resilience must be given to the swift actions of the Reserve Bank and the Government in stimulating our economy. And the weaker Aussie dollar played a key role in boosting the competitiveness of our exports.
If the near-death experience of the economy has taught us anything it is not to count your chickens before they hatch. Forecasts for economic growth and unemployment are just that – forecasts. Forecasts inevitably miss their mark and that’s why businesses and consumers should spend more time looking at their balance sheets than worrying about what may happen.
Gloom and doom reports in the media almost caused Australians to talk themselves into recession. The important thing now is that commentary and analysis of our economic situation becomes more balanced. While the tough times abroad must be acknowledged, the strong position of our economy must be similarly recognised.
It’s amazing how much time is spent looking backwards, not forwards. While Australians should take a short amount of time to assess the latest economic growth figures, they should spend a far greater amount of time on what lies ahead. The good news is that the global economy appears to have bottomed, China is recovering strongly and the housing market is driving the domestic upturn. Businesses must now look to take on staff to take advantage of the stronger economic conditions that lie ahead.
Rumours of the death of the Australian economy have been highly exaggerated. Despite premature pronouncements, the economy has avoided recession – if only just – and now it should be a case of companies and consumers getting on with business. Too much time has been spent fretting over a possible recession when Australians should have been spending more time focussing on their improved financial circumstances.
The Australian economy was certainly flattened by the global financial crisis but it is clear that it has avoided the sort of downturn experienced by other major developed economies. The swift stimulatory actions taken by the Reserve Bank and the Federal Government can take credit for Australia’s impressive resilience, together with the strength of our banking system.
The worst of the economic slowdown is now over. It is becoming clearer by the day that forecasters became too pessimistic, failing to give equal weight to the responsiveness of policymakers as to the fundamental problems faced by the US economy. The federal budget is less than a month old but already it looks to be out of date. The economy could rebound much quicker than expected, reducing the size of the potential budget deficit.
One thing is clear – Australia went close to talking itself into recession. Our economic conditions were nowhere near as bad as other parts of the globe, but somehow we all thought they were as bad. If Australians focus on the opportunities that lie ahead then the rebound could be much quicker and stronger than envisaged only a month ago.
The world is experiencing its biggest ever post war slowdown, so we were never going to come out of this totally unscathed. Growth was at best flat over the last year. More importantly for companies and investors forward looking indicators like building approvals and retail sales suggest the domestic economy has likely seen the worst of this global downturn.
Source Craig James, Chief Equities Economist, CommSec
The Australian economy out-performed all other industrialised nations in the quarter by a big margin.
No state government is officially in recession once exports and imports are taken into account.
CommSec expects the Australian economy to rebound far quicker than Federal Treasury. In 2008/09 the economy will probably grow by only 0.6 per cent, but 2.1 per cent growth is tipped for 2009/10 and 4.1 per cent growth is expected in 2010/11.
What does it all mean?
In may not spark dancing in the streets, but it is clearly good news that the economy has avoided recession. Because this downturn has been all about confidence. If consumers and businesses become confident about spending and hiring again then recovery should be a lot quicker and stronger than most analysts thought possible just a month ago.
Is Australia the wonder from down under? It certainly looks that way. Every other major developed economy went into reverse in a big way in the first three months of the year but Australia actually grew. Much of the credit for Australia’s resilience must be given to the swift actions of the Reserve Bank and the Government in stimulating our economy. And the weaker Aussie dollar played a key role in boosting the competitiveness of our exports.
If the near-death experience of the economy has taught us anything it is not to count your chickens before they hatch. Forecasts for economic growth and unemployment are just that – forecasts. Forecasts inevitably miss their mark and that’s why businesses and consumers should spend more time looking at their balance sheets than worrying about what may happen.
Gloom and doom reports in the media almost caused Australians to talk themselves into recession. The important thing now is that commentary and analysis of our economic situation becomes more balanced. While the tough times abroad must be acknowledged, the strong position of our economy must be similarly recognised.
It’s amazing how much time is spent looking backwards, not forwards. While Australians should take a short amount of time to assess the latest economic growth figures, they should spend a far greater amount of time on what lies ahead. The good news is that the global economy appears to have bottomed, China is recovering strongly and the housing market is driving the domestic upturn. Businesses must now look to take on staff to take advantage of the stronger economic conditions that lie ahead.
Rumours of the death of the Australian economy have been highly exaggerated. Despite premature pronouncements, the economy has avoided recession – if only just – and now it should be a case of companies and consumers getting on with business. Too much time has been spent fretting over a possible recession when Australians should have been spending more time focussing on their improved financial circumstances.
The Australian economy was certainly flattened by the global financial crisis but it is clear that it has avoided the sort of downturn experienced by other major developed economies. The swift stimulatory actions taken by the Reserve Bank and the Federal Government can take credit for Australia’s impressive resilience, together with the strength of our banking system.
The worst of the economic slowdown is now over. It is becoming clearer by the day that forecasters became too pessimistic, failing to give equal weight to the responsiveness of policymakers as to the fundamental problems faced by the US economy. The federal budget is less than a month old but already it looks to be out of date. The economy could rebound much quicker than expected, reducing the size of the potential budget deficit.
One thing is clear – Australia went close to talking itself into recession. Our economic conditions were nowhere near as bad as other parts of the globe, but somehow we all thought they were as bad. If Australians focus on the opportunities that lie ahead then the rebound could be much quicker and stronger than envisaged only a month ago.
The world is experiencing its biggest ever post war slowdown, so we were never going to come out of this totally unscathed. Growth was at best flat over the last year. More importantly for companies and investors forward looking indicators like building approvals and retail sales suggest the domestic economy has likely seen the worst of this global downturn.
Source Craig James, Chief Equities Economist, CommSec
posted by Nik Seirlis at
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