Treasurer Wayne Swan and Prime Minister Kevin Rudd have received a ringing endorsement of their $20 billion series of "cash splashes" in a four-month shopping spree unmatched in the developed world.
The Age - 7th May 2009
Treasurer Wayne Swan and Prime Minister Kevin Rudd have received a ringing endorsement of their $20 billion series of "cash splashes" in a four-month shopping spree unmatched in the developed world.
Retail sales figures for March show a jump of 2.2 per cent in seasonally adjusted spending, more than compensating for a dive of 2 per cent in February.
Since the first stimulus payout in December, retail spending has risen by an extraordinary 4.5 per cent, a result unmatched in the United States where spending fell 2.5per cent, New Zealand (down 1.7 per cent) and Canada and Japan (both down 3.1 per cent).
Only in Britain among other developed countries did spending increase in those four months and that was by 1.6 per cent, less than half of the Australian rise.
Australians spent a seasonally adjusted $76.6 billion in the four months after the stimulus payments, more than in any four months in history.
Economists interviewed yesterday expected the good news to continue.
"We've got every reason to think sales will maintain decent momentum going forward," said ICAP Securities economist Adam Carr.
"The second stimulus package has only started to hit consumers, ensuring that retail sales are likely to remain buoyant over the next couple of months," said CommSec economist Savanth Sebastian.
The $8.7 billion December stimulus handout was followed by $4 billion in March and $7billion last month.
A belief the stimulus payments were being spent is one reason the Reserve Bank board decided at its meeting on Tuesday to leave interest rates unchanged.
Reserve Bank forecasts to be released tomorrow will show the bank is expecting Australia to return to economic growth at the end of the year after what would have been one of the mildest recessions on record.
The bank's view was endorsed by the International Monetary Fund, which predicted the Australian economy would return to growth in 2010 after shrinking 1.1 per cent this year.
In a strong endorsement of economic management in Australia and New Zealand, the fund's Regional Outlook for Asia and the Pacific said this was due to "strong policy response, healthy financial sectors and exchange rate depreciation".
Treasurer Wayne Swan accepted the compliment but noted the report also highlighted the effect of the global recession on Australia's customers including Japan, South Korea and Taiwan.
Mr Swan welcomed the retail trade news, saying the Coalition had to explain why it had opposed the measures.
At the National Press Club, Opposition Leader Malcolm Turnbull said it was unsurprising that if "you handed out billions in one hit, some of it will be spent".
"Yes, it has had an impact on retail sales figures, but it was very little bang for a very big buck. If you want to spend government money on stimulating the economy, you should spend it on infrastructure." (Credit: Fairfax)
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