Australia Headed for Recession

Australia's economy has shrunk for the first time in eight years, raising fears that the country may be heading for a recession.


The economy contracted by 0.5% in the last three months of 2008 from the previous quarter. Economists had been expecting it to grow by 0.2%.

Hit Hard:
If Australia's economy shrinks again the current quarter, it will enter recession, usually defined as two consecutive quarters of contraction. Australia's resource-based economy has been hit hard by the decline in commodity prices.
The country's mining firms are cutting back on spending, slashing staff numbers, and shelving projects. This is being seen as an unsurprising outcome illustrative of the magnitude of the global recession and its impact on the continent.

Other developed economies of the world are already reeling under the worldwide meltdown. Japan’s GDP dropped 3.3% in the final quarter of 2008. Japan recorded its biggest deficit in 13 years. The US saw a 1.6% drop and the UK contracted by 1.5%.

Recession was inevitable:
According to analysts, Australia had hoped to duck the worst of the global recession, but this no longer looks possible."After surviving the 1997 Asian financial crisis and the 2000 dotcom bubble, Australia had hoped to complete the impressive hat-trick of not being forced into recession by the global financial crisis," our correspondent says.

Australia is being regarded as faring better than others. However, this seems to be the recession that Australia could not avoid.