Australia enters into its 24th straight year ofeconomic
expansion in 2015, with its citizensamong the worlds richest. But
with the miningboom ending, the exchange rate diving,
andjoblessness increasing, commentators havebegun to utter the
dreaded R word: recession.
Australia has run out of luck, claims market strategist Gerard
Minack, who has assigned a 40per cent probability of recession for
the worlds 12th-biggest economy in 2015.
Under almost any scenario the outlook is for a lower Australian
dollar, lower interest rates andunderperforming equities, Minack
told ABC News.
If there is a recession expect sharp outright losses in
equities, notably banks, and significant fallsin house prices.
The former Morgan Stanley global strategist has pointed to weak
domestic demand, fallingmining investment, a declining
manufacturing sector and shrinking bureaucracy as all adding upto a
gloomier picture.
Minacks forecast was technically proved accurate last December,
when gross domestic product(GDP) data for the September quarter
2014 showed the nation had posted two straight quartersof negative
income growth.
Real net national disposable income, a measure of what
Australian consumers, businesses andgovernments receive in exchange
for their goods and services, contracted by 0.3 percent in
thequarter after falling by 0.2 percent in the June quarter. This
reflected slumping commodityprices, with sharp falls in the prices
of key exports such as iron ore and coal pushing down theterms of
trade, a measure of the value of exports compared to imports, which
fell by 3.5 percentand nearly 9 percent year-on-year.
According to ANZ economist Felicity Emmett, nominal GDP
contracted by 0.1 percent in thequarter, a disappointing result for
the economy.Soft income growth will weigh on profits, wages and
public revenues, and flow through to softer
A Recession for Australia? | The Diplomat
http://thediplomat.com/2015/01/a-recession-for-australia/
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