Recession to last longer: Aust treasurer

April 26, 2009 06:10:57 PM

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The global recession is deep and likely to last longer than first thought, Australian Treasurer Wayne Swan said, in comments broadcast here Sunday.

Speaking in Washington after a meeting of G20 finance ministers, Swan said there was agreement at the talks that the recession had "some way to go".

"Talking to finance ministers here, this weekend, it's pretty clear this recession is deep and it will probably go for longer than many had anticipated only a short time ago," he told Australian commercial television.

Swan said the sobering outlook reinforced the need for coordinated action from governments to stimulate their domestic economies.

"It has made me and the government more determined to cushion the Australian economy from the savagery of this global recession," said Swan, who has so far announced more than 50 billion dollars (31 billion US) in stimulus measures.

He declined to comment on speculation that the annual Budget, due on May 12, would include another stimulus package concentrating on infrastructure such as rail, road port projects.

He said Australia's debt levels were relatively low compared with other developed economies, providing flexibility in the way it deals with the financial crisis.

"This government has room to move when it comes to fiscal policy," Swan said.

The IMF last week predicted Australia's economy would contract 1.4 percent in 2009 before staging a mild recovery next year with 0.6 percent growth.

The IMF forecasts the world economy will shrink 1.3 percent this year then grow 1.9 percent in 2010.

Swan predicted a surplus of 21.7 billion dollars in last year's budget as Australia's economy was riding high on a China-driven resources boom.

But analysts expect Budget data to show the figure has turned into a 35-50 billion dollar deficit due to government efforts to kickstart the economy in the face of the global recession.

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