Economy strong despite World Bank report aap

Economy strong despite World Bank report
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On Wednesday 18 January 2012, 14:42 EST

Australia is in for a tough economic year after the World Bank slashed its global growth forecasts and warned there could be a worldwide recession worse than three years ago.

In its latest Global Economic Prospects report, the World Bank downgraded its forecasts for 2012 and 2013 by almost half due to a deterioration in the world economy over the past six months.

The Washington-based institution now forecasts global growth at 2.5 per cent in 2012 and 3.1 per cent in 2013, down from its June 2011 forecast of 3.6 per cent for both years.

"The world has entered a very difficult phase characterised by significant downside risks and fragility," the bank said on Wednesday (AEDT).

The report warned capital markets could freeze up, leading to a crisis similar in size to that caused by the collapse of US investment bank Lehman Brothers in September 2008, which marked the start of the global financial crisis.

"The world could be thrown into a recession as large or even larger than that of 2008-09," it said.

While there were few direct references to Australia in the report, Acting Treasurer Bill Shorten said it backed up the Labor government's previous warning that the world economy was in a dangerous phase.

"There's no doubt we've got a tough year ahead of us," Mr Shorten said on Wednesday in a statement.

"There are huge challenges in the global economy and these will inevitably impact on our economy and our budget."

The government's mid-year budget review released in December showed a further $20 billion had ripped from overall revenue since May 2011 due to the aftershocks of the 2008-2009 global crisis.

But Mr Shorten said the fundamentals of the Australian economy remained strong despite the threats.

"We've got solid growth, contained inflation, low unemployment and very low debt," he said.

The World Bank projected the United States, the world's largest economy, would grow by 2.2 per cent this year as it slowly recovered from its recession.

China, Australia's largest trading partner, would remain the world's growth engine, although at a slower pace of 8.4 per cent this year, compared with an estimated 9.1 per cent jump in 2011.

The World Bank said the financial turmoil caused by the escalation of the sovereign debt crisis in Europe was spreading to both developing and high-income nations and was generating "significant headwinds".

It said capital investment to developing nations had fallen by nearly half compared with a year ago.

Europe appeared to be in recession and growth in several major developing nations (Brazil, India, Russia, South Africa and Turkey) had slowed, partly as a result of a tightening in domestic policy.
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STRINGY
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STRINGY 1 minute ago Report Abuse

the big banks ceos, politians from liberal and labour, are all in the same bed ,inbreeding is not healthy and breeds defornity ,just look at the morons in side show alley,if this is the best we can vote into our political systen then we are in a sinking ship.AUSTRALIA FOR AUSTRALIANS ,FOREIGNERS HAVE NO RIGHT TO BE IN OUR POLITICAL SYSTEM

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John
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John 4 minutes ago Report Abuse

The banks need to be more customer orientated, not shareholder. The shareholders only get their dues if customers pay. Soon the customers will leave the banks for more generous financial organisations. Beware shareholders... don't be too greedy

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Mark
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Mark 7 minutes ago Report Abuse

The more the government tells us Australia will be in a good position the more we should worry. It's like they are trying to sell us on that. Happened to me when I worked for a major company, for six months we were told it'll never close, rumours are false and then it happened. It's all to stop panic. The fact is we are not. We are well in deficit, unemployment will most definitely jump this year with the retail sector still taking a beating because of the high dollar and our manufacture sector cannot compete with the cheaper imports . . . these are all facts. Our dollar is up solely because of mining which is largely foreign owned . . the government has allowed that, what exactly is going to see us through? If there is a GFC2, mining will go belly up and we will need to borrow more.

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Jasper Kremer
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Jasper Kremer 8 minutes ago Report Abuse

And please everyone stop crying over a surplus. We are in so little debt (22.3%) of our GDP we could borrow over a trillion dollars (up to 90% is safe) and be fine.

And please get over Labor.

1. We did not go in a recession because of them (they spent billions... but that is the point you put alot of money in the economy to keep it up). I know i got 2 grand and bought a TV and a laptop... that made some profit for people and would have helped with jobs. So that was good.

3. The mining tax, mhhhmmm it is such a bad idea to tax billionaires of 30% of their PROFITS. Herp.

4. Carbon Tax. This i do not agree on however when they needed the Greens to retain power they needed to give them what they wanted, if Tony Abbott had the chance he would have done it in a flash.

5. Gay rights. Everyone deserves to have equal opportunities, this is a religious matter and should be delt with by the churches. If churches wish to marry a gay couple then let them go ahead. This should not be a government affair. Make it legal and let the churches decide. Considering Labor agrees on this that is good.

So please stop with the stupid comments about how she lied, it happens life goes on.

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Rob B
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Rob B 9 minutes ago Report Abuse

Not sure what red rag beady eyes is wearing today but I guess he's one of those idiots that hasn't grown up with the typical Labor policy of spend now keep us in power and let some other poor soul pick up the pieces when it all falls apart. Wake up and read history if you are too young to know.Let me tell you Whitlam,Hawke,Keating and now Gillard have all followed the same path to inevitable disaster and every time they get their grubby hands on treasury it takes years longer to recover the debt and waste. I know as during the Keatin fiasco i was paying something like 18% interest on home loans. How easily many forget or we wouldn't have these fools from labor back in parliament again.

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Red_Herring
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Red_Herring 14 minutes ago Report Abuse

Australia,the BEST place on earth!

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Marja-Liisa
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Marja-Liisa 18 minutes ago Report Abuse

Gillard,Swan, Shorten and all the other Alp and Green fonies couldnt run a Chook Raffle let alone this beautiful country. We do have hard times coming thanks to the clowns listed above. You pay big money to go to a good Circus, Alp and the Greens are one big Circus.

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Watcher
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Watcher 18 minutes ago Report Abuse

Basemetals are a good indication of what's really happening. I read them like a bible.

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Beady Eyed Big Eared Briber
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Beady Eyed Big Eared Brib ... 19 minutes ago Report Abuse

Even other countries admit we have the best economy in the world!!...Too bad the Abbottollah always talks us down..sad little green eyed man.

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Watcher
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Watcher 20 minutes ago Report Abuse

On more reliable sites than simple yahoo news...Headline for today.
LME WEBCAST - Base metals improve on Chinese optimism, still susceptible to eurozone headlines.
That's not warning, that's being careful.

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