Coca-Cola Amail chief sounds caution on recovery talk

Coca-Cola Amatil managing director, Terry Davis believes there are tough times ahead for the Australian economy and the green shoots of recovery could wither away before taking root.

He said though times had been tough in Australia, the worst was yet to come. Davis was speaking at a business function hosted by the American Chamber of Commerce in Australia in Sydney.

He added that greatest worry was rising unemployment which may reach 8.5 per cent in the next two years and the rapid rise in unemployment would have an immediate effect on domestic consumption. This in turn, would impact critical consumer confidence levels he said.

He said though economists tended to discount the unemployment indicator he believed that the psychological impact of mass sackings on consumers was important and needed to be considered.

While acknowledging the appearance of signs to suggest the beginnings of recovery in certain sectors of the economy, he said it was too early to call the end of the downturn.

He added that the rise in consumer confidence, the sharemarket revival and the Reserve Bank of Australia's decision to keep maintain interest rates were all positive indicators but those combined with the coming July tax cuts and the follow-through of the government's second fiscal stimulus package though apparently positive enough were not positive enough in his opinion to declare that the worst was over in Australia.