Australia’s economy does not have to fall into recession but negative sentiment could see the country talk itself into one, BIS Shrapnel warned today.
According to the analyst the RBA’s recent rate reductions and government’s fiscal stimulus package will reboot the economy with Australia unexposed to the dire problems facing other developed nations.
The real problem, the economic forecaster said, is the lack of confidence affecting household and business expenditure.
BIS Shrapnel’s comments coincide with prime minister Kevin Rudd’s calls for consumers to “go out and spend” their share of the government’s cash injection to keep the economy from stalling.
“By spending their payments, families and pensioners will help create Australian jobs and strengthen the Australian economy," Mr Rudd said.
"I urge families and pensioners who have been doing it tough to spend their payments in a responsible way to make their family Christmas all the more special."
The government is handing over $4.8 billion to pensioners and $3.9 billion to families in a bid to ward off an economic downturn.