Economic slump tipped to drag on

Sandra Fickweil

03-01-2009

01:07

The article in the Australian Harald Sun says that Australian's economy will contract due to decreasing world trade as well as the weakening Chinese economy.

According to the Dun and Bradstreet's global economic and risk outlook report, the GDP will decline by 0.2 per cent in 2009. It says that "a collapse in world trade, particularly in the Asia-Pacific region, and a sharp drop in economic growth for China have significantly heightened the downside risk to Australia's outlook".

D&B chief executive Christine Christian states that especially Australian exports within China are constantly decreasing and that the worst is still lying before us. As Australia's economy is closely linked to that of China, Australia expects a further decline due to China's massive downturn.

The report states that the GDP of China is expected to be 3.5 per cent in 2009, whereby its GDP expanded by 9 per cent in 2008, down from 13 per cent in 2007.

Christine Christian further says that the deteriorating global outlook requires a "unique balancing act" from the Australian government, there is a need of more stimulus.

In the beginning of February, the Australian Treasury announced to release a $42 billion fiscal stimulus package.

The report states that the world economic growth will fall by 1.2 per cent in 2009, whereby the International Monetary Fund is expecting the global economic growth in 2009 to fall between minus 0.5 and minus 1.0 per cent.

Due to the world wide recession, even Australia is affected. The article talks about a report that investigates the situation at the moment with regards to Australia. Although the Australian government already released a fiscal stimulus, economy is still struggling and until now it cannot be seen any improvements. The biggest problem for Australia is its dependence to China. Most exports and imports are directed to respectively from China. Due to its massive downturn however, Australia now also feels the economic decrease.

http://www.news.com.au/heraldsun/story/0,21985,25229038-664,00.html