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Business confidence and conditions inched upwards in December but a wave of negative global developments will see Australia fall into recession this year.
NAB’s monthly Business Survey and Economic Outlook released today showed that business confidence and conditions bounced back slightly in December – by 10 and 11 points respectively.
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The fact remains however that business confidence remained little better than levels seen at the bottom of the 1990 recession.
While Australia avoided the worst of the “global carnage” in 2008, NAB said it had revised Australia’s GDP forecasts significantly, in light of deteriorating global developments.
Just last week China announced annual growth of just 6.8 per cent – the first time the country recorded single digit growth since 1999.
Official figures from the UK on Friday also confirmed that the UK has slid into recession; GDP declined by 1.5 per cent in the final quarter of 2008.
NAB now expects Australia’s GDP to shrink 0.25 per cent in 2009, implying a “moderate” recession that it predicts will see rates fall to 3 per cent by March.
Rising unemployment, the bank added, could force a further 0.50 per cent rate cut in the third quarter of 2009.
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