Australia GDP forecast at zero growth in 2009: Dun & Bradstreet

The Australian economy is expected to record zero growth through 2009, according to the latest report by Dun & Bradstreet (D&B).

The global credit crisis is causing the Australian economy to take a setback, with Dun and Bradstreet's Economic and Risk Outlook Report citing real gross domestic product (GDP) to show no growth through 2009, from an earlier estimate of 1.9 per cent in 2008. However, the report expects the country's real GDP to recover to one per cent in 2010.

The Australian economy and traders, mainly exporters who export about 40 per cent of their goods to the Asia-Pacific region, are going to be affected the most with the tightening of trade finance and the expected slowdown in emerging markets said D&B chief executive Christine Christian.

The demand from the Asian region is significant to the prosperity and growth of Australia's economy.

In 2009, Australia's exporters will be badly hit as this demand is expected to slump significantly, causing default risks to rise substantially, she said. SMEs in particular will be faced with problems arising out of managing their costs, with trade finances becomes more costly while price of goods will fall.

"The international credit crisis dominates the current risk outlook more than any risk factor since the early 1990s,'' said the report."Business confidence has already declined to levels not seen since the 1990s and it may have further to fall as the challenges of late 2008 continue throughout 2009."

Though the federal government's fiscal stimulus package and reduction in interest rates could persuade people to spend in 2009, "regardless of the outcome of these measures, business activity will remain depressed,'' she said. The Australian Bureau of Statistics said that the Australian real GDP rose by 0.1 per cent in the September quarter while the non-farm GDP contracted by 0.3 per cent.

Australian GDP decline is in line with D&B's expectation of global growth falling to one per cent through 2009, the lowest level in more than 10 years, amidst deteriorating trade and fuelled by falling demand.

World economic growth is likely to improve to 2.1 per cent in 2010, the report said. Of the G7 nations, the economies of five countries - the US, the UK, Germany, Italy and Japan are expected to contract in 2009, with the remaining two - France and Canada expected to post positive growth in 2009.

Dun & Bradstreet expects 2009 to start with major restructuring measures of national financial regulations, which got exposed due to the credit crunch and, "The face of international finance is therefore likely to change noticeably during 2009."

The report also said developing countries that grew strongly in the last five years, will now slow down sharply in 2009. "While the vulnerabilities vary across the globe, no region will escape the fallout completely.''