Credit Cards - Consumer spending to fall during downturn, BankSA reports

The financial crisis is set to have a negative impact on consumers' spending habits, it has been suggested.

At the launch of the Trends economic bulletin from Access Economics and BankSA, it was reported that although Australia was "running at speed" until the emergence of the global recession, moves to introduce a series of base rate cuts and the government's fiscal stimulus packages should see the country through the downturn better than most.

Furthermore, Australia's strong financial sector was praised.

However, that is not to say the country will not face difficulties, as consumer spending - which could include money spent using credit cards - is likely to fall.

"This is going to be a year when people spend less and it will take 12 months to see the true impact of the government's response," Chris Richardson, director of Access Economics, points out.

Rob Chapman, BankSA managing director, claims that in spite of forthcoming tough times, Southern Australia has "many reasons to remain confident".

Meanwhile, Michael Stutchbury, economics editor for the Australian, wrote in a recent blog entry that the string of base rate reductions combined with the fiscal stimulus packages "have held up consumer spending".

Written by Kate Guthrie