Economists proven wrong as Australia avoids recession
Published on Thu, 04/06/2009, 12:30:49
Australia has narrowly avoided going into recession, with the Australian economy growing 0.4 per cent in the March quarter.
According to the Australian Bureau of Statistics, in seasonally adjusted terms, GDP increased by 0.4 per cent in the March quarter, which means the economy has avoided two consecutive periods of negative growth, which is how a recession is measured.
The news has surprised many economists who predicted that the economy will contract over the quarter.
The Australian Retailers Association (ARA) executive director Richard Evans said economists predicting a recession were wrong and should have paid more attention to retail trends
“The doom and gloom rhetoric being bandied about by our economic commentators was doing a great job of dampening consumer confidence but wasn’t providing any accurate forecasts,” said Evans.
Retailers are working hard to overcome this negative rhetoric and stimulate consumer spend with $10.6 billion in stocktake sales expected over June which is a 2.7 per cent growth on last year’s $10.3 billion spend.
“Economists have been shouting ‘recession’ for the past six months and today they have egg on their face.
“These are the same economists who didn’t predict the economic downturn in the first place. These are the economists who failed to listen when retailers detected a drop in consumer spend in late 2007. Instead, interest rates were raised in an attempt to rein in consumer spend that was already drying up,” added Evans.
At the moment there is a lot of good economic news and retailers are predicting improved growth from the September quarter.
“Retailing is the barometer of the economy with the rest of the supply chain lagging three to six months. The retail sector’s economic predictions have been accurate throughout this downturn and it’s time our economists, who are doing a great job of frightening consumers into financial hibernation, listened to the retail experience.
"Retailers will wait to hear this new dialogue of leadership. When it comes, consumer confidence will return and funds will flow from the retail hub through supply channels leading economic recovery," said Evans.