WORLD> Asia-Pacific
|
WORLD> Asia-Pacific
|
|
Australians asked to spend $5.2 billion before Xmas
(Agencies)
Updated: 2008-12-08 17:15 CANBERRA/SYDNEY -- Australia's government began to hand out more than A$8 billion ($5.2 billion) in cash to consumers ahead of Christmas, but some analysts say the money may not be enough to stop the country from sliding into recession.
The cash splurge comes after data showed the economy barely grew at all in the September quarter, when gross domestic product rose just 0.1 percent, its lowest pace in eight years, and with unemployment set to rise due to the global slowdown. TD Securities senior strategist Joshua Williamson warned the spending package may not be enough to lock in long-term growth. "As the package is a temporary measure, any growth on the consumption side of the national accounts in the December quarter from the package will unwind just as quickly in the first quarter of 2009." The cash for families and pensioners is part of a A$10.4 billion economic stimulus package announced on October 14 and aimed at boosting confidence and retail sales. The payments will bring more relief to consumers after the central bank slashed interest rates to a 6- year low last week and left the door open for more cuts to save its economy from recession. Prime Minister Kevin Rudd wants people to spend the money in the run up to Christmas, saying the spending will help protect jobs and prevent the economy from slowing down further. "If the government doesn't empower consumers at a time like this, in the midst of global financial crisis, then in fact we will have even greater challenges ahead," he said. Underlining the depressed state of the economy, data showed last week that vehicle sales drove off a cliff in November as skittish consumers shied away from big purchases, which, together with more evidence of the poor state of the housing market, points to a miserable fourth quarter for consumption. A survey showed on Monday that Australian businesses cut back sharply on job advertisements in November as the global financial crisis intensified, pointing to an inevitable rise in the number of those out of a job and more rate cuts. |
