Wednesday, June 25, 2008
SOUTH-EASTERN Australia is close to recession, with growth in spending likely to slow to about 1% and business investment falling 5% as high interest rates drive down economic activity, Westpac is warning
The ANZ has also forecast a two-speed economy, predicting in April that Victoria's output would grow just 1.5% in 2008-09.Victoria's Treasury, however, has boldly forecast growth of 3%, virtually a normal year.Mr Evans said that in past slowdowns, housing construction had taken the brunt of the slump in demand. This time, construction was already so low relative to underlying demand that most of the slump would be felt in business investment and consumer spending. Westpac predicts that in the south-east, growth in household spending will slow from 4.3% last year to 2.4% in 2008 and 2009. Business investment, which grew 5% last year, will shrink by 5% next year.