Australia: Deputy Reserve Bank Governor, Ric Battellino says the Australian economy is likely to shrink for a few more quarters, and there is room for more rate cuts. In a speech in Brisbane, deputy governor Ric Battellino said while tentative signs of improvement were surfacing in the world economy, with the United States beginning to repair its banking system and a possibly bottoming in the Chinese economy, Australia was not immune to the difficult times ahead and gross domestic product (GDP) was likely to fall in 2009.
“The reality is that we cannot fully insulate ourselves from what is happening elsewhere in the world. As such, GDP is expected to fall in 2009,” Mr Battellino told the Urban Development Institute of Australia.
In questions following the luncheon, Mr Batellino said the Australian economy was likely to shrink for a few more quarters, though a tentative recovery could be seen later in the year.
“I think it’s likely that it further falls in the next few quarters,” Battellino said. “If all goes according to plan and (with) the forecast for the global economy, I think towards the end of this year we can start to look forward to some recovery activity.”
Mr Battellino said monetary policy had worked effectively, with the RBA cutting its key cash rate by 400 basis points since September.
“The monetary policy transmission process has been effective and there remains scope to ease policy further if circumstances require,” Mr Battellino told the conference :: Read the full article »»»»