Australia in recession, central bank chief says
The Associated Press, Sydney, Australia | Tue, 04/21/2009 12:03 PM
Australia has followed the rest of the world into a recession, the central bank chief said Tuesday.
But Reserve Bank of Australia Governor Glenn Stevens emphasized that "sensible" policies remained in place and that the government had not been forced to bailout the banking sector.
"It is very rare for Australia to escape an international downturn and there is no precedent for avoiding one of this size," Stevens said in a speech. "Whether or not the next GDP statistic, due in early June, shows another decline, I think the reasonable person ... would come to the conclusion that the Australian economy, too, is in recession."
The governor's comments come a day after Prime Minister Kevin Rudd said it was inevitable that Australia would slip into a recession.
A recession is defined as the economy shrinking for two consecutive quarters. Australia's economy shrank 0.5 percent in the last quarter of 2008 - its first contraction in eight years.
Stevens said a recession would be Australia's eighth since World War II, and most were linked to international business cycles.
He said the path forward was confidence in the business sector and noted that public finances remained in "very sound" shape.
"Sensible policy frameworks - both macroeconomic and microeconomic - remain in place; the financial regulatory system is strong and tested," Stevens said.
He said Australia's trade and investment, particularly with the dynamic Asian region, would help Australia's recovery.
"Australia's genuine long-term economic prospects remain good, and there remain good grounds to think that we will continue to weather the storm better than most," Stevens said.
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