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Consumer spending is forecast to remain subdued well into the new year as unemployment and economic uncertainty weigh on Australians’ minds.
Access Economics said today it expected retail sales to record negative growth of 0.1 per cent in the 2008-09 financial year and stunted growth of just 0.9 per cent in the 2009-10 financial year.
This compares to 4.5 per cent growth in 2007-08.
“Fear is the key to the outlook,” the economic analyst and forecaster said, with a possibility that savings rates could increase rapidly and chaotically as a result of the economic downturn.
“Lost confidence means shoppers are on strike, with discretionary retailers bearing the brunt. Sharemarkets have slumped, and consumers are worried that – sharp cuts to mortgage rates notwithstanding – housing prices are at risk too. They are also worried about job security.”
