ID :
17469
Sat, 08/30/2008 - 10:56
Auther :
Shortlink :
https://oananews.org//node/17469
The shortlink copeid
PM warns of tough times ahead
(AAP) - Households are being warned of tough times ahead but Prime Minister Kevin Rudd believes the economic picture will start to improve by next year.
The Reserve Bank of Australia is expected to cut official interest rates when it
meets next Tuesday amid signs of a slowing economy.
Economists widely believe it will cut the current cash rate of 7.25 per cent by 0.25
of a percentage point, making it the first downward movement since December 2001.
New figures show that consumers appetite for credit continued to wane as they dealt
with high mortgage rates and skyrocketing costs of living.
Lending for housing, personal use and business rose 0.5 per cent in July, and was up
11.2 per cent in the year, the Australian Bureau of Statistics said.
Demand for housing loans rose by 0.5 per cent in July and 9.8 per cent over the year
- the slowest pace in 21 years, when the annual rate was 9.8 per cent in March 1987.
Commsec economist Savanth Sebastian said the figures showed households were doing it
tough.
"Consumers are cutting back on borrowing with no room to move," he said.
"The latest reading on private sector credit highlights the stress on the household
budget.
"Overall credit has fallen for the second consecutive month, while personal credit
fell by 0.7 per cent in July matching levels noted in the 1991 recession."
Mr Rudd acknowledges times are tough and getting tougher.
The US financial crisis has hit hard around the world and it means managing the
Australian economy is a big challenge, he says.
"It sits tough, really tough," Mr Rudd told Fairfax Radio Network.
"I'd much rather be up front about that with the Australian people rather than
pretending that it's any different.
"It's a big challenge. And it's been a big challenge frankly since day one."
But there are signs of improvement on the horizon.
"We believe that into the period of 2009 you'll start to see economic growth picking
up," he told Fairfax Radio.
Mr Rudd said Reserve Bank forecasts indicated economic growth should improve by the
June quarter next year.
"If you go (with) the forecasts which were released by the Reserve Bank in August
you see growth by the June quarter 2009 improving to two and a quarter and then by
the end of next year to two and a half," he said.
The Reserve Bank of Australia is expected to cut official interest rates when it
meets next Tuesday amid signs of a slowing economy.
Economists widely believe it will cut the current cash rate of 7.25 per cent by 0.25
of a percentage point, making it the first downward movement since December 2001.
New figures show that consumers appetite for credit continued to wane as they dealt
with high mortgage rates and skyrocketing costs of living.
Lending for housing, personal use and business rose 0.5 per cent in July, and was up
11.2 per cent in the year, the Australian Bureau of Statistics said.
Demand for housing loans rose by 0.5 per cent in July and 9.8 per cent over the year
- the slowest pace in 21 years, when the annual rate was 9.8 per cent in March 1987.
Commsec economist Savanth Sebastian said the figures showed households were doing it
tough.
"Consumers are cutting back on borrowing with no room to move," he said.
"The latest reading on private sector credit highlights the stress on the household
budget.
"Overall credit has fallen for the second consecutive month, while personal credit
fell by 0.7 per cent in July matching levels noted in the 1991 recession."
Mr Rudd acknowledges times are tough and getting tougher.
The US financial crisis has hit hard around the world and it means managing the
Australian economy is a big challenge, he says.
"It sits tough, really tough," Mr Rudd told Fairfax Radio Network.
"I'd much rather be up front about that with the Australian people rather than
pretending that it's any different.
"It's a big challenge. And it's been a big challenge frankly since day one."
But there are signs of improvement on the horizon.
"We believe that into the period of 2009 you'll start to see economic growth picking
up," he told Fairfax Radio.
Mr Rudd said Reserve Bank forecasts indicated economic growth should improve by the
June quarter next year.
"If you go (with) the forecasts which were released by the Reserve Bank in August
you see growth by the June quarter 2009 improving to two and a quarter and then by
the end of next year to two and a half," he said.
