By Victoria Batchelor
July 3 (Bloomberg) — Australia’s economy, which has so far skirted the global recession, may stall after reports showed exports dropped to a 14-month low, bank lending fell and home- building approvals declined by the most since 2002.
Australia was one of few major economies including China and India to grow in the first quarter as government cash handouts and record interest-rate cuts stoked consumer spending. Gross domestic product expanded 0.4 percent from the previous three months, in contrast to a 3.8 percent decline in Japan and a 1.4 percent contraction in the U.S.
This week’s reports suggest the global recession is biting as stimulus efforts fade, which may prompt the central bank to cut interest rates. Reserve Bank Governor Glenn Stevens said last month that slower growth and inflation give him scope to reduce borrowing costs if it helps secure “a durable upswing.”
“The full brunt of the deepest and most synchronized post- war global recession has yet to fully bear down on Australia,” said Su-Lin Ong, Sydney-based senior economist at RBC Capital Markets. “Export income, the terms of trade and business investment are all set to move substantially lower in 2009.”
Its kind of a pity for them….its like as though they just delayed their own downfall. Should have taken the ride together with the rest of the world and cushion the impact as much. I think nowadays most government have a bad habit of handing out cash to the people just to encourage spending. I guess these sort of fiscal policies have a short term buffer and boost consumer confidence?
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