It looked all so gloomy for Australia last year. The global recession was strangling the Australian economy, the jobless rate was climbing, malls were almost empty, tourism was slumping, bushfires caused billions of dollars in damages, and Prime Minister Kevin Rudd was under severe stress to prevent a complete collapse. Analysts were forecasting a deep recession for the economy – expecting at least a 0.4% contraction this quarter after a 0.6% decline the previous quarter.
Yet, how things have changed. Not only did the economy avoid a recession by growing 0.1% during the first quarter of 2009, but a recent survey has identified Australia as the best place to ride out the global downturn.
The Servcorp International Business Confidence Survey obtained responses from 7500 business people from 24 countries around the world. Australia topped the list, and China, the economic powerhouse of the world, came in second. But the U.S. was ranked 13th along with the Netherlands.
The results won’t surprise those who have always believed that Australia was one of the most stable developed economies in the world. The government reacted swiftly to the global economic meltdown with not one but two multi-billion dollar stimulus packages, and the central bank has kept the interest rate at its lowest level in decades in an effort to stimulate demand. The efforts are starting to bear fruit. Consumer spending rose, as did government spending, but the biggest driver of the GDP growth for the first quarter this year was a 2.7% surge in exports.
Celebrations though are low-key. As Rudd pointed out, Australia ‘is not out of the woods yet,’ despite the fact that it has left a number of developed economies still floundering in the wild. It was an opinion that was shared by Australian Treasurer Wayne Swan. The jobless rate has continued to climb, and business investment has dropped. Australia fell into a surprise trade deficit in April, its first in nine months. Clearly, there is work to be done, and the seemingly contradictory data indicates that the full effects of the global recession are yet to be realized. But Australia has proven to be resilient over the past few months, emerging as perhaps the best performing developed country in the world. And despite the ‘obstacles’ and challenges that Rudd warns of, results from the Servcorp survey show, Australia is still expected to come out stronger at the end of it all.
Postcards from Around the World
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