Australian Prime Minister Kevin Rudd said yesterday it was “virtually impossible” for Australia’s economy to grow in the current climate, all but conceding a recession is looming.
The economy shrank for the first time since 2001 in the final quarter of last year and a similar outcome in the first three months of this year would put Australia in recession — defined as two straight quarters of contraction.
Rudd said he did not see how Australia’s economy could grow amid a global recession that “is getting worse before it gets better.”
“It’s clear that the impact of a worsening economic global recession will make it virtually impossible for Australia to sustain a positive economic growth for the period ahead,” Rudd told Channel Nine television.
Australia enjoyed eight years of strong growth, largely due to a China-driven resource boom, but demand for Australian commodities has collapsed as waning demand means exporting countries need less raw materials.
Unemployment in Australia recently hit a four-year high of 5.2 percent and Rudd said the global downturn would hurt the labor market “just as night follows day,” although he refused to say how high he believed it would climb.
“If the global economy is shrinking and global trade is shrinking for the first time in a quarter or a century, then it’s going to have roll-on consequences for our growth, our jobs and our budget,” he said.
Rudd’s center-left Labor government has implemented two stimulus packages worth more than A$50 billion (US$33 billion) to try to cushion the economy and the prime minister refused to rule out further packages.
“We reserve the right to take whatever further action is necessary to continue to support the economy and jobs,” he said.
Most economists believe Australia is already in recession and only needs to await the release of official first quarter growth figures in a few months to confirm the fact.