Economy shrink leaves Australia fearing a recession

Those who are considering a move Down Under to beat the recession in the UK may want to think again. The economy in Australia has shrunk for the first time in eight years, severely heightening the concern that the nation may be on its way to a recession of it’s own.

According to the Australian government, the economy shrunk in the last quarter of 2008 by 0.5% compared to the previous quarter. Experts were previously forecasting slight economic growth in the country but the contraction has raised fears amongst Australians that the credit crunch has finally caught up with them. Another three months of economic decline will officially force Australia into recession.

Australia’s economy is based on resources and has been heavily affected by the decline in commodity prices. The country’s mining firms have cut back their spending and future projects, whilst reducing staff numbers in order to save money. Nevertheless, Australia’s apparent turmoil is in stark comparison with that of other countries, at least according to Treasurer Wayne Swan.

"Our economy did contract in the December quarter, but by far less than other developed economies,” Swan says. “This is a sobering but unsurprising outcome, because I think it does illustrate the full impact of the magnitude of the global recession and how it's impacting on this country." The Gross Domestic Product of Japan dropped by 3.3% in the same period, while the United States and Great Britain saw declines of 1.6% and 1.5% respectively.

The BBC’s correspondent in Sydney Nick Bryant has said Australia had hoped to avoid the worst of the global financial crisis back in September but that this now looked impossible. “After surviving the 1997 Asian financial crisis and the 2000 dotcom bubble, Australia had hoped to complete the impressive hat-trick of not being forced into recession by the global financial crisis.” However, it appears obvious that Australia will not be able to perform financial heroics this time.

They may be better than us in every sport going and the weather may be enviable but unfortunately it’s not all perfect Down Under.

(Startupoverseas.co.uk, 2009)