Great Recession in Oceania

Late 2000s recession

Late 2000s recession in Africa Late 2000s recession in the Americas Late 2000s recession in Asia Late 2000s recession in Australasia Late 2000s recession in Europe

The Australasian business community has been hit hard by the global financial crisis for a number of reasons. Although regional banks generally have good liquidity requirements, the commercial wing of the industry was overexposed to sovereign wealth funds and governments made few provisions for the drop off in trade with China. Additionally, many institutions of the New Zealand economy are regulated by Australian authorities, as cross-border banking has been allowed to gather pace since the late 1980s.

Australia

There has been a credit market crisis in the Australian economy since early 2008. The taxation system is currently being reviewed in order to reduce its complexity and increase the tax concessions made for investment income, although it remains uncertain what — if any — financial products will be excluded in the proposed changes.

In July 2008, the National Australia Bank cut a A$850 million bond sale by two thirds following investor flight and opted for a 100 percent write-off on a clutch of "senior strips" of AAA-rated collateralized debt obligations (CDO) worth A$900 million. Banks began avoiding lending for land, to focus on refinancing existing clients, and small developers held on to their properties as second-tier loan costs (up to $15 million) were, reportedly, unaffordable since February. Housing prices consequently fell in the second quarter for the first time in about three years, restricting consumer confidence to its lowest level in 16-years. High profile casualties of the credit crunch include Allco Finance, MFS, ABC Learning, Babcock & Brown and Centro while numerous other institutions have lost a significant part of their value.

Sources such as the IMF and the Reserve Bank of Australia predict Australia is well positioned to weather the crisis with minimal disruption, sustaining more than 2% GDP growth in 2009 (while many Western nations go into recession). The World Economic Forum recently ranked Australia's banking system the fourth best in the world, while the Australian dollar's 30% drop is seen as a boom for trade, shielding from the crisis, and for helping to slow growth and consumption.

Some analysts have predicted the continuing decline of trade in 2009 could put the economy into recession for the first time in 17 years. Unemployment will increase because of slower growth, declining profits and government revenues.

First Commonwealth Government stimulus package

In order to avoid or cushion the impact of a recession, the Federal Government proposed a AU$10.4 billion stimulus package. The package would provide cash payments to those already on government transfer payments. $4.8 billion of this package went to pensioners, carers and war veterans with individuals getting a lump sum of $1,400 and couples getting $2,100. $3.9 billion was to be paid for people who were receiving family tax benefit A and people who were receiving family tax benefit B. $1.5 billion was set aside for the first home grant with it being doubled to $14,000 for existing homes and trebled to $21,000 for newly built homes. Other smaller programs would make up the rest of expenditure. Treasury estimated that it would boost GDP by 1% and UBS chief economist predicted that if all of the stimulus money were spent then it would boost Christmas sales by 30%.

In March 2009, Canberra announced that the Australian economy contracted by 0.5% in the last quarter of 2008, leading to fresh worries of recession. On Wednesday the 22nd of April, 2009 it was declared that Australia was to fall into recession by Prime Minister Kevin Rudd (however this comment was made incorrectly as soon following this statement economic data showed GDP rose not contract therefore australia did not fall into recession ).

On June 3, the Federal Government announced that Australia did not show negative growth for two consecutive quarters, and thus has not officially entered recession, providing an optimistic outlook for the economy. The positive GDP figure was due to a increase in the trades surplus due to an increase in exports and a large decrease in imports. This combined with steady consumption figures to prevent the economy contracting in this quarter.

Unemployment

Employment, Unemployment and Participation
Date	Number of people employed ,000s	Number of people unemployed ,000s	Unemployment Rate, %	Participation Rate, %	Seasonally Adjusted Number of people Employed ,000s	seasonally Adjusted number of people unemployed ,000s	Seasonally Adjusted Unemployment Rate, %	Seasonally Adjusted Participation Rate, %
March 2009	10 794.9	611.1	5.4	65.4	10 771.6	649.9	5.7	65.5
April 2009	10 790.6	630.8	5.5	65.5	10 798.9	614.6	5.4	65.4

New Zealand

New Zealand Institute of Economic Research's quarterly survey showing New Zealand's economy contracted 0.3 percent in the first quarter and Treasury figures suggested the economy also contracted in the June quarter putting New Zealand in a technical recession. The Treasury says the economy could recover in the second half of the year under the impact of high dairy prices boosting farmer incomes and cuts to personal tax rates, which come into effect on Oct. 1. About 23 financial companies in New Zealand have filed for bankruptcy in a year. Housing starts in New Zealand fell 20 percent in June, the lowest levels since 1986. Excluding apartments, approvals dropped 13 percent from May. Approvals in the year ended June fell 12 percent from a year earlier. Second-quarter approvals dropped 19 percent. The figures suggest a decrease in construction and economic growth. House sales fell 42 percent in June from a year earlier. The New Zealand Treasury concluded that the country's economy had contracted for a second quarter based on economic indicators, putting New Zealand in a recession. New Zealand's central bank cut rates by half a percent arguing the economy was in recession. New Zealand's GDP declined by 0.2 percent in the second quarter putting the country in its first recession in a decade.

External links

• ILO Job Crisis Observatory