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Looks like Australia managed to avoid recession: lessons for the world?

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posted on Jun, 2 2009 @ 10:39 PM
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So as the world economy is shrinking, Australia it looks like, has managed to avoid a recession, things are tough here, but nowehere near as bad as everywhere else.

Its interesting, what did the Australian Government and people do to
avoid shrinkage for 2 quarters?

The GOVT provided 2 lots of stimulus packages at christmas and last month to most citizens (not me, good dang) to keep people spending.
But what was the cost? Australia last financial year was in the black we had no defecit and in 6 months we have accrued a debt that will not be paid off till 2025.

Though we may have avoided a recession, we are yet to see at what cost.

My bit in all his, was rather than do reduncies and shrink my staff numbers, I gave shares of my business to all my staff, and therefore to grow it became their 'ownership' and what you know, it worked


So providing stimulus is effective, though the way the govt did it at such high debt, and we dont know still how that will affect us down the track. Higher taxes no doubt.

Where the US has been bailing out companies, Australia bailed out the individual citizens that would spend to keep companies afloat...better plan methinks.



The Australian economy has avoided recession and is "through the worst" of the global financial crisis, according to Australian Bureau of Statistics (ABS) data. The ABS reported that the economy grew by 0.4 percent in the first three months of 2009, defying international trends and debunking Prime Minister Kevin Rudd's April prediction that a recession was "inevitable". Speaking after the release of the data, Mr Rudd said the economy is "not out of the woods yet", but welcomed the figures as "good news for the Australian economy". A recession is defined as two consecutive quarters of negative economic growth. The economy shrank by 0.5 percent in the final quarter of 2008. Economists said the result showed that government spending had supported the economy and that the weaker Australian dollar in Q1 had supported strong export growth. "It is an encouraging sign," Riki Polygenis, economist at ANZ told ninemsn. "It shows that the economy has been responding to fiscal stimulus and lower interest rates." Australia is the only industrialised country in the world except South Korea to record economic growth in the first three months of this year. Treasurer Wayne Swan claimed that the result was due in part to the government's stimulus strategy, which, he said, had saved "thousands" of jobs. "The government's economic stimulus strategy is clearly helping to cushion Australia from the worst impacts of the global recession and ensure we are well placed to seize the opportunities presented by the global recovery when it arrives," he said. The unexpected result means that Australia may now be "through the worst" of the financial crisis that has caused huge slumps in economic growth across the world



money.ninemsn.com.au...




posted on Jun, 2 2009 @ 10:43 PM
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Don't get complacent for too long. Higher taxes mean higher cost of resources for China.



posted on Jun, 2 2009 @ 10:47 PM
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reply to post by eldard
 


Yes true and we just dont how its going to pan out

hence whilst it lokks good, its kinda scary aswell. I get taxes over 50% thats the price of living in the lucky country, don tknow how much higher our taxes can go. But technically my account works wanders



posted on Jun, 2 2009 @ 10:48 PM
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off-topic post removed to prevent thread-drift


 



posted on Jun, 2 2009 @ 11:32 PM
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Originally posted by eldard
Don't get complacent for too long. Higher taxes mean higher cost of resources for China.


Why do you think China is scouring the world buying up resource companies. Anyhow our taxes are balanced by the low value of the $A. China's lack of demand for resources is based on the economies of Europe and America not our taxes.

That being said, it wasn't what the government did in the last year, it's what Howard did in his 11 years of power. He left Labour with an extremely stable and robust economy, which as usual they'll wreck. Imagine if Labour had been at the helm during the Asian Economic Crisis.



posted on Jun, 2 2009 @ 11:39 PM
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I'm no economic guru, but I think the tight banking regulations plus the early stimulus checks helped to some degree. While it's true that the govt has put us into debt for a long time, one wonders what would of happened if they hadn't. Mass unemployment? That would be expensive too, what with unemployment benefits etc.

Imo, saving jobs was the right thing to do but I think they gave away too much instead of investing in infrastructure job creation. Which every way you look at it, we had to go into debt. Even the libs agree, except they say they would of saved $25billion. Woopeee



posted on Jun, 3 2009 @ 12:07 AM
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I'm in Canada. Good news we are very conservative with our banking. They are not in trouble like the US. We are primarily resources, then agriculture, then manufacturing.

Bad news, we live beside the US. They are practically our only customer.

Big question. Do we and our dollar go down if they go down?

No easy answer.

Mike



posted on Jun, 3 2009 @ 02:16 AM
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I'm no expert , but I find it hard to believe that the government stimulus packages given out to aus citizens really helped us keep our economy afloat during the global financial crisis .
I don't think it would have made a huge difference if we were given it or not , I mean it was only $900 dollars or so . Big deal .
I don't think the global events would have had a huge effect on Australia whether we were given the stimulus package or not.
But this huge bloody debt sure will .
The job losses in the mining sector that affected us the most , due to places like China not needing as much of our resources, due to their biggest clients going into recession .
Looking at most other job sectors though , the work remained stable , so a lot of people were earning the same amount as they were before the stimulus package .
I think it was more a case of the media scaring people into not spending that was the problem.
Anyways , just my opinion , and I admit I don't know a great deal about federal and global economics , just a layman's point of view.
Feel free to correct me ,
Cheers



posted on Jun, 3 2009 @ 02:53 AM
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reply to post by Takka
 


I agree with you in terms of the medias fear mongering.
There certainly was reason to worry, however the constant panic thrown out from mainstream no doubt had an effect on peoples buying patterns.
I pretty much stick to George Negus' Dateline for proper reporting on the subject.



posted on Jun, 3 2009 @ 03:23 AM
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Hey,

One side effect of the stimulus package was that I consciously looked for Aus products rather then an overseas equivalent. Having a small population size lets people influence the economy to a greater degree then say the U.S or England.

The 'flow up' technique, rather then the usual 'flow down' seems to have worked quite well from what I have seen, and I don't know anyone who was complaining about receiving the money!

It helped not just on a financial level, but also psychological level. To many people it alleviated the stress (if only momentarily) which in turn lead to a decrease in things like domestic abuse and other violence related crimes. It also provided an opportunity for people to invest that money into our local business and services.

Remember, the stimulus package for us was only one way the govt has tried to help the country, and as a whole I believe the Rudd govt has done well after only being in office a short time


Cheers

Shane

p.s I spent my stimulus package on a holiday just down the road from me. We spent 5 days relaxing at a retreat near Mt Barker in WA. Good times!



posted on Jun, 3 2009 @ 03:26 AM
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Agreed , George Negus' Dateline program is one the only news type shows I feel I can take seriously .
SBS news also has a much less sensationalized , more logical type of news coverage .
Today Tonight & 60 minutes or whatever the major networks call their news shows are not worth watching imo.
Its sad how many people believe the mindless drivel they show as gospel though .



posted on Jun, 3 2009 @ 04:14 AM
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I have to cringe at 20/20 and Today Tonight.

"Tonight on 20/20: Find out if you're going to have a heart attack or instead die from cancer. Thats tonight on 20/20" Oh my god...

Agreed about Datline and SBS.



posted on Jun, 3 2009 @ 05:30 AM
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Originally posted by rogue1

Originally posted by eldard

That being said, it wasn't what the government did in the last year, it's what Howard did in his 11 years of power. He left Labour with an extremely stable and robust economy, which as usual they'll wreck. Imagine if Labour had been at the helm during the Asian Economic Crisis.


Other economies were also strong prior to the global meltdown, so yes Costello was a very good treasurer, but the Labour Government has managed something different to the rest of the world that has kept our economy in growth. A recession isnt how much you had in the kitty previously, a recession is 2 quarters of no economic growth, and this stability was managed on Rudds watch.
I'm interested if we can work out why we stayed afloat when other countries could not.



posted on Jun, 4 2009 @ 07:34 AM
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I'm sorry, but avoiding a technical recession had little to do with the stimulus packages. Those were just short term incentives and pure vote buying at its best.

We avoided recession purely by luck. China has been on a commodity buying spree as a backdoor way of getting out of US dollars. It just so happens that this buying spree happened during the last quarter and kept us out of technical recession. Nothing to do with good govt planning.

You can see in the statements made by Rudd and Swan that they fully expected the economy to go into a technical recession. They have been buttering up the country for a while now. This was as much as surprise to them as to the public. It also shows how little the government actually knows about how the economy is behaving and what is going on. They have no true idea of what the true state of the economy is (partly, i believe, because they are looking at the wrong indicators).

PS: even though we havent met the definition for a technical recession, Australia *is* in recession. Ignore GDP for a second and look at the production numbers. I believe they are now showing 11 consecutive months of decline. That tells us we have been in a recession for a long time. GDP does not show the full value of the economy, as it does not include the full production structure. If you include the full production structure consumption makes up about 30% of the economy and production 70%.

Thats how you can be in recession without the GDP numbers showing it.



posted on Jun, 4 2009 @ 07:39 PM
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good post zazzafraz

lets see how long and far AUS house prices fall ....this should take it's toll on the economy in late 2009-2010....but there is less supply and less risky borrowers in homes so the fall won't rival the UK or US..and the unemployment numbers coming out in the next week will see if the last tick down was a fluke or a sign that unemployment is flattening at a solid level.....

i know AUS had little exposure to subprime market but i was trying to get numbers to see their exposure to ALT-A loans as well as look at their CRE sector........



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