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'Worst is behind us,' says Australian treasurer

business Updated: Jul 21, 2009 09:23 IST

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Australian Treasurer Wayne Swan on Tuesday said the worst of the global recession may be over as he welcomed a new report which predicted a rebound in the country’s growth next year.

Swan said the government’s stimulus efforts had helped protect Australia from the downturn but warned of rising unemployment as “global headwinds” buffet the domestic economy.

“It may well be that globally the worst is behind us,” Swan told public broadcaster ABC.

“But there are still very substantial global headwinds affecting economies around the world and also affecting the Australian economy in particular.

“We will see that in the dramatic drop in business investment, we’ll see that in the dramatic drop in the terms of trade. Those factors will push up unemployment locally.”

Independent think-tank Access Economics said Australia would register growth of 0.4 per cent in the year to July 2010, while the government projection shows a 0.5 per cent contraction.

Australia has so far avoided a technical recession, as defined by two successive quarters of negative growth, posting the strongest figures of any advanced economy during the downturn.

Swan attributed the economy’s resilience to government stimulus packages totalling more than 50 billion dollars (40.8 billion US) handed out since late last year.

“That’s why economic stimulus is important, to support employment and support business,” he said.

Access said unemployment was likely to peak at 7.5 per cent in 2010, up significantly on the current 5.8 per cent but a full point down on the official forecast of 8.5 per cent.

It also stressed the importance of China to Australia, saying the Asian giant’s earlier-than-expected recovery had helped lift the outlook since the government’s last official forecasts in May.

Resource-rich Australia enjoyed a boom period of uninterrupted growth until this year as Chinese demand for its raw materials brought in a stream of export revenue.

But Swan said he was not relying on China’s turnaround because it was too early to know whether it was sustainable.

“Certainly the recent patterns (in China) have surprised on the upside and we certainly can’t count on that as we go forward and we haven’t been counting on that,” he said.