The Australian economy will continue to suffer the effects of the financial crisis as world trade continues to collapse against pessimistic forecasts for Chinese economic growth, new figures reveal.
The latest Dun & Bradstreet Global Economic and Risk Outlook report shows that because of plummeting trade figures in east Asia, global economic growth is now forecast to contract to -1.2%.
The company now forecasts Australian economic growth to decline from 0.5% to -0.2% during 2009.
The decline is also due to the economic deterioration of China and Japan, which are expected by Dun & Bradstreet to record growth of 3.5% and -3.8% respectively for 2009.
The report claims that protectionist policies will challenge the health of the world economy over the coming year, including the “buy American” clause in US President Obama’s massive $US787 billion stimulus package.
The report also says that protectionist policies that raise concern are support for domestic car industries, and the rise of policies aimed at restricting international capital flows, forcing banks to turn to domestic lending.
But D&B claims Australia is suffering largely at the decline in world trade, as trading partners such as China, South Korea, Hong Kong and Vietnam have suffered risk downgrades.
The report claims that growth declines in China will affect Australia the most, as Chinese imports overall have fallen 43.1% year-on-year in January.
Dun & Bradstreet chief executive Christine Christian says the report shows the downturn is far from over, and the country should be prepared.
“Clearly the worst is yet to come, and Australian executives have recognised this in the
expectations for declining sales and revenue in the June quarter,” she says.
“This requires a unique balancing act from the Australian Government. They need to continue to stimulate the Australian economy but do so in a way that avoids contributing to protectionist trends, both manufacturing and financial, around the world.
“For Australian businesses the only way to survive this environment is to focus on the
fundamentals. Effectively assess and monitor risk, tightly manage cashflow and market to those customers who represent the best risk.”
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Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
