Shift to regional trade increases risk to Australia
Thursday, 26 March 2009
A collapse in world trade, particularly in the Asia-Pacific region, and a sharp drop in economic growth for China have significantly heightened the downside risk to Australia's outlook, according to a new report released by Dun & Bradstreet (D&B).
Recent months have seen an "outright collapse in world trade, particularly in the emerging markets of East Asia," according to the quarterly GlobalEconomic & Risk Outlook Report.
This finding has been echoed by the World Trade Organisation, which now expects a massive nine per cent slump in global trade this year, which is a much bigger slump than earlier predictions.
Many believe the WTO is impotent and more countries are turning to regional trade deals as governments seek to manage the political consequences of recession.
Australia's Prime Minister, Kevin Rudd, who left for Washington yesterday to meet US President Barack Obama, effectively conceded the local economy was in recession, saying earlier in the week that is is "virtually impossible for the Australian economy to avoid a recession."
The most recent national accounts figures show that the Australian economy went backwards at the end of last year.
If the figures for the next quarter show the same result Australia will be in a technical recession.
Mr Rudd told Channel Nine that there are no signs that the Australian economy is going to return to positive territory soon.
"I think the global economic recession is getting worse before it gets better," he said.
"It's clear that the impact of a worsening global economic recession will make it virtually impossible for Australia to sustain a positive economic growth for the period ahead."
"If the global economy therefore is shrinking and global trade is shrinking for the first time in a quarter of a century, then it is going to have roll-on consequences for our growth, our jobs, and our Budget and therefore the need to do everything we responsibly can to support jobs and activity on the way through until we get to global recovery."