Former Prime Minister Kevin Rudd warns that Australia will sink into a recession in 2020 unless the government copies its approach to the global financial crisis.
His Labor government spent $ 42 billion on an incentive package in early 2009, which allowed Australia to prevent a technical recession, but put the budget in deficit.
A decade later, the unemployment rate in Australia remains below 5.2 percent and has been at that level for four consecutive months.
The Australian stock market also peaked at the end of July for the first time since November 2007, the month in which Mr. Rudd won the election that brought Labor to power.
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Former Prime Minister Kevin Rudd warns that Australia will sink into a recession in 2020 unless the government copies its approach to the global financial crisis
Nevertheless, Mr. Rudd said that US President Donald Trump's trade war with China, Australia's largest trading partner, could cause a local recession for the first time since 1991.
& # 39; There is complacency in our current economic policy institutions & # 39 ;, he wrote in an opinion article for The Australian Financial Review that was published Thursday.
& # 39; complacency about the risk of recession.
& # 39; Protectionism, especially between the two largest economies in the world, China and the US, has a major impact on the confidence of companies and investors worldwide. & # 39;
As the new Prime Minister, Mr. Rudd chaired two stimulus packages – to tackle the GFC in October 2008 and February 2009 – that accounted for $ 52 billion.
This included giving $ 900 checks to Australian households and financing a disastrous home insulation system related to the deaths of four young men.
Rudd said that US President Donald Trump's trade war (departed from Xi Jingping) with China, Australia's largest trading partner, could cause a local recession for the first time since 1991
Recessions in Australia
Until the recession in 1991, Australia had experienced an economic contraction a few times per decade.
A prolonged recession that began in September 1982 lasted for a year, during a period of prolonged drought and the devastating forest fires on Ash Wednesday in Victoria and South Australia. That followed a new recession in 1981.
Another recession also took place in 1977, during an era of widespread strikes.
The economy also struck in the last two quarters of 1975, when Governor General Sir John Kerr turned down Gough Whitlam as prime minister of labor.
A recession also took place at the end of 1971 and early 1972, a few months before Billy McMahon lost the election, ending 23 years of coalition government.
During the quarters of June and September 1961, a credit squeeze also led to a new recession, which ended just two months earlier, after which Prime Minister Robert Menzies remained in power with one seat.
Source: GDP national accounts data from the Australian Bureau of Statistics
A federal Labor government has not produced a surplus since 1989 when the late Bob Hawke was in his third term as prime minister.
The Scott Morrison government promised in April that a surplus would be delivered in 2019 for the first time in 12 years.
Rudd argued that the coalition's focus on achieving a budget surplus was at risk of putting Australia in a recession over which no living prime minister was in charge.
& # 39; The current government, instead of reducing the budget to a surplus in the last three to six years – as it was solemnly promised in the previous elections – is now politically obsessed with a surplus for 2019-2020, which is possible the slide to recession is getting worse, & # 39; he said .
& # 39; Assuming Canberra can prevent a recession – now a one-in-three risk for 2020 – it must also act to reform an economy that has reached its bottom at best in the last five years with a negligible productivity growth. & # 39;
Professional service provider KPMG, who employed Mr. Rudd as a Chinese consultant in the late 1990s, refuted the former Prime Minister's suggestion that Australia was in danger of falling into recession.
& # 39; We are not expecting a recession, & # 39; said chief economist Dr. Brendan Rynne to Daily Mail Australia on Thursday.
Rudd argued that the coalition's focus on achieving a budget surplus was at risk of putting Australia in a recession over which no living prime minister was in charge. The construction sector in Australia is particularly weak, with official figures showing a 9.6 percent decline in housing construction in the year until June
Australia then and now
AUSTRALIA IN 1991
The unemployment rate reached 9.9 percent
The interest rate was 10.5 percent – 18 months after reaching 18 percent
Inflation grew at an annual rate of 3.3 percent
The Australian dollar was worth US $ 77.44
The average house price of Sydney was $ 182,200. The equivalent values of Melbourne were $ 127,000
AUSTRALIA IN 2019
The unemployment rate is 5.2 percent
Interest rates at a low of one percent
Inflation is 1.6 percent, which is lower than the 2-3 percent target of the Reserve Bank
The Australian dollar is worth 67 cents
The average house price of Sydney is $ 864,993 while in Melbourne it is $ 710,151
Sources: Australian Bureau of Statistics, Reserve Bank of Australia, CoreLogic and Macquarie University paper, House Prices in Australia 1970 to 2003
Nevertheless, Australia's economy is growing at the slowest pace since the GFC for a decade, with only 1.8 percent in the year to March.
& # 39; The economy is weak, there is no doubt about it, & # 39; said Dr. Rynne.
KPMG expects the June figures to show an even slower annual growth rate of 1.4 percent.
That level is less than half the long-term average of 3.2 percent between 1991 and 2018.
The construction sector in Australia is particularly weak, with official figures showing a 9.6 percent decline in housing construction in the year until June.
Investments, an important indicator of economic activity, fell by one percent over the same period, the Australian Bureau of Statistics revealed on Thursday.
While transport infrastructure projects by the government are sustaining the economy, traditions threatened to become unemployed as consumers, who are already struggling at high cost of living, cut back on home renovations.
& # 39; New construction activity is weak. If there is the softness associated with renovations and expansion work, then the local delivery of those services will certainly find the labor market more challenging than it would otherwise be, "said Dr. Rynne.
When Mr. Rudd came to power in late 2007, the US was already in recession due to the subprime mortgage crisis.
Over the past decade, the US unemployment rate has fallen from 9.5 percent to an almost 50-year low of 3.7 percent.
Equity markets, however, are volatile this month with a 10-year yield on US bonds falling below that of a comparable two-year interest rate.
This situation, known as the reverse yield curve, occurred before the American recessions in 1980, 1981, 1990, 2001 and 2007.
While government infrastructure projects maintain the economy, traditions threatened to become unemployed as consumers, who are already struggling at high cost of living, cut back on home renovations
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