Report Points to Recession

Dun and Bradstreet's Global Economic and Risk Outlook report points to a contraction in the Australian economy of 0.9% in 2009.

The report cited sharp falls in exports and a lack of available credit as a drag on the economy. Economic activity is created through the credit process which has the effect of growing money supply by putting more money into circulation. Given the tight credit conditions where businesses are struggling to raise funds this 'multiplier' effect will be stunted for some time.

D&B forecast gross domestic product to grow by 0.7% in 2010, and the unemployment rate to reach 8.5% by the end of next year.

In contrast yesterday the May motor vehicle sales were released showing that sales rose by 5.4% reflecting recent positive moves in consumer confidence.