Slow recovery for Australian economy

Australia’s economy will face a slow recovery as world growth picks up and stimulus measures are withdrawn, according to Access Economics.

According to Access, predicted higher interest rates, coupled with the withdrawal of the Federal Government’s stimulus measure and a slowing in Chinese growth will mean the recovery would be significantly weaker that first expected.

”Australia has dodged the bullet of a deeper downturn, and that is a grand achievement,” Access says in its latest Business Outlook report to be released today.

The economic consultancy expects the unemployment rate, now at 5.7 percent, to peak at 6.8 percent in the middle of 2010 and warns of a “jobless recovery” as employers move to increase the hours of existing employees before hiring new workers.

While Access admits the Australian economy has held up better than expected, as a result of consumer spending, low interest rates and government cash payments; such measures are now being withdrawn and interest rates are starting to climb, meaning the recovery won’t be as fast as first thought.

“The implications of that for the recovery are tougher than most realise,” the report says.