Treasurer Wayne Swan has predicted that the economy is set to nosedive even further in the next few months as the backlash of the failing US and Asian economies hits Australia.
Swan warned that the collapse of output amongst Australia’s major trading partners will have a dramatic impact on our economic growth.
Growth in the US slowed from minus one, to minus 1.6 over the weekend, and Japan has experienced a contraction in growth, dropping 13 percent in a year.
“ We’ve now got a situation where something like seven out of our top 10 trading partners are in recession and this will have a dramatic impact on growth in Australia in the December quarter,” said Swan.
The Federal Government is warning Australians that we may be in for a recession, with official figures released tomorrow expected to reveal our economy went backwards by as much as one percent in the last three months of 2008.
In order to stave off a recession, the RBA is expected to meet today to announce whether they will cut interest rates, or keep them on hold.