Australia is not Heading into Recession, Says Finance Minister
The federal government of Australia has declared that figures reflecting weak financial growth need not necessarily mean recession. Rubbishing rumors that the country is close to an economic recession, Mathias Cormann, the finance minister, and Joe Hockey, the federal treasurer, assure that Australians are not facing any risks of recession.
Hockey further says that there are several government policies in place, all serving to strengthen the country’s economy. The Australian Associated Press reports that the country’s service sector has been growing fast, recording the fastest growth rate in the past seven years.
However, that rate of growth dropped to its lowest in two years, by 0.2% from May to June. The Australian Bureau of Statistics reports that the country’s growth rate has faltered owing to fall in business as major energy and mining exporters have fallen into recession.
Although economists say that Australia is heading toward recession, Hockey begs to differ and confidently states that Australia will not follow in the footsteps of Brazil and Canada. However, he stated that Australia will continue to experience slow rate of growth if it fails to do something about its rigid tax regulations, eliminate taxes, and make decisions in favor of free trade.
He said that adverse climate has had a major impact on mineral exports, which has weakened the country’s economy. He also said that dependence has been shifted from mining investment to other sectors as “business conditions outside the mining sector have risen to their highest level” in the past five years. He said:
Looking forward, we are already two months into the first quarter of a new financial year, and the government’s May budget is already adding momentum to the Australian economy.
Agreeing with Hockey, Cormann said that figures indicating low economic growth do not also indicate that the country is falling into recession.
Speaking at “Morning with John McGlue,” a radio show hosted by 720 ABC Perth, he said:
The Australian economy continues to grow, despite the biggest fall in our terms of trade in about 50 years.
He said that Australia should focus on increasing productivity, make sure that there is enough competition in the market economy, and reduce costs of business operation.
Saul Eslake, an economist with The Independent, said that he is not worried about recession although he agreed that Australia’s growth rate was too low. Another worrying factor is that the Australian Dollar has fallen below US 69.86 cents and continues to fall.
