With a federal budget that is ‘buggered’, a slowdown in China imminent and house and share prices now paying the price for earlier unsustainable growth, Australia will slide into a recession Access Economics warned today.
In its latest quarterly Business Outlook, Access Economics said “Australia’s recent prosperity will unwind scarily fast”.
The forecaster said that China’s slowdown will trigger Australia’s recession in the first quarter of 2009.
According to Access Economics, economic growth contracted by 0.1 per cent in the December quarter and will suffer a similar decline in the first quarter of 2009. It also forecast unemployment to climb over seven per cent by early 2010.
As a result, the group expects the Reserve Bank to “take out insurance” and reduce the cash rate to as low as 2.5 per cent in the coming months.
Official data on the nation’s growth in the December quarter is due for release by the ABS in March.