Australia expected to slide into recession this week

Australians will know by Wednesday whether the Federal government’s stimulus packages have been enough to prevent a technical recession in this country.

That’s when the Statistician will release the March quarter’s national account figures.

As Federal parliament will be sitting this week, that will put the Federal government under great pressure.

Two successive quarters of negative growth make up a technical recession, on the standard definition.

And Australia has already chalked up one such quarter.  The Statistician reported, months ago, that the Australian economy contracted by 0.3 percentage points in the final three months of last year.

By any reasonable standard, Australia is already in recession  And the bureau’s figures are expected to confirm that.

But the Federal Treasurer, Wayne Swan, couldn’t resist the temptation to get in early on this one.

In his latest weekly economic note, Mr Swan said:”The government has taken decisive action to stimulate our economy and cushion Australians from the worst the world can throw at us.”

He said there had been three stages in its stimulus plans, targeting family incomes first, then “shovel ready” projects and finally bigger infrastructure projects.

“The one thing that we know for sure about our first quarter GDP outcome is that, without the government’s substantial economic package, the result would be much worse.”

The coming week will be a big one for the economy.

The Reserve Bank board will be holding its usual monthly meeting tomorrow – and there have been some hints that it might cut Australia’s interest rates again.

Retail trade figures for April will be out today and the Statistician is also planning to release Australia’s balance of payments figure for the March quarter tomorrow along with the nation’s building approval figures for April.