Australian Economy Contracts Unexpectedly
The day after the Reserve Bank of Australia elected to hold rates at 3.25%, the release of the country’s growth figures confirmed that the economy is in fact officially contracting. Yesterday, the bank judged that previously-provided monetary and fiscal stimuli would provide the economy with the necessary jolt for the rest of the year to dodge a more serious recession (though, to be completely fair, they did make note of the ‘”economic weakness at present”). The GBP number, however, came in at -0.5% for the last quarter of 2008, marking a significant deterioration from Q3’s 0.1% increase. As could be expected, the usual suspects, housing and exports, were the cause of the decline: housing investment fell 1.2% over the quarter, and exports, on which Australia depends heavily for economic growth, dropped 0.8%. This number represented the worst quarterly reading since 2001, and confirms that no stone will go unturned as economies reel with the lasting effects of the credit boom bust. Read Full Article »
