Australia: 40% chance of recession? Try 95%

This is the absurd thinking of economists. Australia has a 40% chance of recession next year. What does that even mean? If you asked me, I would say the chances of recession in Australia are 100%. You have a slowing property market, financial sector turmoil, a falling currency, plunging commodity prices and a global credit crunch. How do Australian economists figure Australia is going to be immune to this? Was this not the thinking in the U.S. just 4 or 5 months ago?

Australia’s economy will slow sharply in 2009 but is not expected to contract, before growth rebounds in the following year, a survey shows.

The survey of forecasts of the 14-member Australian Business Economists executive committee found business and dwelling investment would ebb next year, resulting in a median gross domestic product (GDP) growth rate of 1%.

That would be down from an estimated 2.3% in calendar 2008, and come ahead of an uptick to 2.2% in 2010.

“Despite the weaker prognosis in 2009, annual average GDP growth was not forecasted by any committee member to contract in 2009,” the ABE survey said.

Asked what chance the economy had of going into recession, members settled on a relatively high 40%.

It’s this type of forecasting that leaves most people underwhelmed by economists.

Source
Economists sees 40% chance of recession – Sydney Morning Herald