Country Report Australia January 2009

Outlook for 2009-10

• The popular Labor Party prime minister, Kevin Rudd, will need to defend his government from opposition criticism over a sharp slowdown in economic growth before the next federal election, which will probably be held in 2010.
• Mr Rudd shares some policy views with the new US president, Barack Obama, and this should help relations between the two countries.
• The fiscal budget is expected to remain in deficit in 2009-10 as economic weakness weighs on revenue collection and the government continues to spend to stimulate the economy.
• The Reserve Bank of Australia (the central bank) will continue to cut interest rates in the first quarter of 2009, despite the fact that inflation is forecast to remain well above the bank's target range.
• The Economist Intelligence Unit has revised down its GDP growth forecast for 2009 to 0.5%, from 0.8% previously, owing to a weaker outlook for global economic growth and greater evidence of strain in the domestic economy.
• The Australian dollar will weaken in 2009-10, owing to poorer economic conditions, lower commodity prices, falling domestic interest rates and high levels of risk aversion among global investors.

Monthly review

• The latest survey of voting intentions by a local polling firm, Newspoll, in early December shows that the ruling Labor Party has widened its lead over the opposition Liberal-National coalition.
• The government is in a comfortable position to push ahead with its policy agenda, although its long-awaited inaugural statement on national security, delivered in early December, proved to be a damp squib.
• The federal government is making additional payments to the states totalling A$3.5bn (US$2.3bn) for health and education spending in the remaining months of fiscal year 2008/09 (July-June), with the aim of creating more jobs.
• The federal governments policy white paper on climate change, released in mid-December, opted for a target of reducing greenhouse gas emissions by 5% between 2000 and 2020.
• GDP growth slowed to a crawl in the third quarter of 2008, at just 0.1% quarter on quarter, pulling year-on-year growth down to 1.9%. Non-farm GDP fell in quarter-on-quarter terms, by 0.3%, during July-September.
• Business confidence plunged to a record low in November, according to a survey by the National Australia Bank, while business conditions were at their weakest since late 1992.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;59;39;37
NAICS Code: 52;44;31;336