Canberra: The Australian economy will slide into recession this year after an unprecedented 17 years of growth, an economic consultant said on Monday.
The report by the respected Australian consultant Access Economics contrasts with predictions by the International Monetary Fund in November that Australia would likely be one of the few economies in the world to grow in 2009.
The Access Economics report predicted that Australia’s central bank will soon slash the benchmark cash interest rate from 4.25 to 2.5% and that the Australian dollar will slump this year from 68 US cents to 56 cents.
“For Australia, 2009 will be a year much like 1990 — the economy will be slip sliding into recession, and it won’t be clear just how bad this will get,” the report said.
The report said there will be a quick unwinding of Australia’s recent prosperity, which was built on selling energy and minerals such as coal and iron ore to feed China’s once-booming industrial expansion.
“China’s slowdown is Australia’s recession,” the report said.
Treasurer Wayne Swan, whose government has predicted sluggish growth this year, would not comment on the recession prediction.
“There’s no doubt that a slowing of the global economy will impact upon commodity prices,” he told reporters.