Banking & Saving - Australia avoids falling into recession

The Australian economy grew by 0.4% throughout the first 3 months of 2009, allowing it to avoid falling into recession.

Some of the key factors that helped the economy to rebound from the 0.5% contraction recorded from October to December 2008, were increases in exports and consumer spending.

Prime Minister Kevin Rudd said Australia was now the only advanced economy not to have fallen into a recession.

A recession is defined by an economy experiencing two consecutive quarters of decline.

The Australian Central Bank also had its part in preventing a recession by cutting interest rates in February to the lowest level seen in 45 years to 3.25%, which also helped consumers by taking the pressure off mortgage repayments for some homeowners.

The government also launched several schemes designed to help kick-start the economy as part a of multi-billion dollar stimulus package. These included an increase in infrastructure spending, as well as the cash handouts given to all tax paying Australians in an attempt to increase consumer spending.

Mr Rudd said Australia was still at risk of falling into recession despite the economic growth seen in the first quarter of 2009.

"We're not out of the woods yet, we've got a long way to go," he said.

This was also stressed by analysts who agreed that the risk of recession remained.

Australian-based JP Morgan economist Helen Kevans said: "We have technically avoided recession, but if you look at the details in the data it is not a pretty picture. We have imports falling off a cliff, which is a symptom of firms smashing investment and which is bad for our employment outlook."

Written by Sam Gooch