The pundits who make guesstimates at these kind of things were round about the mark with the GDP figure out today. The median estimate of growth in the September quarter in the sample taken by Bloomberg was 0.2 per cent and the figure came in at 0.1. And as the consensus was that the quarter would probably mark a low point there is no real evidence that things are going to get markedly worse. The Australian economy, as anticipated, is doing markedly better than that of most other developed economies which have been declining rather than growing.
Since the beginning of this current quarter the Reserve Bank has knocked a couple of percentage points off interest rates and all government welfare recipients are about to receive a handy pre-Christmas cash bonus. While some of the interest rate savings will probably go to reducing the size of the family mortgage consumer demand is sure to be boosted enough to prevent the December quarter economic outcome becoming negative.
Looking into next year the Federal Government has already given a considerable boost to the spending capacity of local government with the money to go towards projects with a short lead time. Prime Minister Kevin Rudd and Treasurer Wayne Swan have both indicated a preparedness to do more if they see signs of a serious growth decline continuing. With inflationary pressures now well and truly gone there is scope too for the Reserve Bank to cut interest rates again.
So, being a betting man, I will put my money on Australia avoiding a recession and say there is every chance that the country might even avoid one quarter with a negative GDP figure.