Economy will recover, says ANZ

23 February 2009

Having been among the first to predict a year ago that the financial crisis would become a "bloodbath", ANZ National Bank's chief executive officer, Mike Smith, now has a more optimistic view about a of global recovery.

While underlining that the next six to nine months would be tough, as more companies failed and jobs were lost, he said the combined effects of stimulus packages and lower interest rates were likely to spur the global economy back into life.

He highlighted Australia's chances of avoiding the worst of the recession now ravaging the US, Europe and Japan, although he conceded the country would experience a "significant slowdown" for most of this year. "Today, the early signs in certain sectors are already with us," he told an American Chamber of Commerce lunch in Sydney on Friday.

"Retail sales growth is slowing, unemployment is rising, house prices are weakening in some areas, commodity prices have dropped and company profits are softer."

He was cautiously optimistic that any Australian recession would be shallow - if the country actually entered one, according to the technical definition of two quarters of contraction.

"Although I have said there will be a severe slowdown in Australia, I am less pessimistic than many and I believe there is cause for optimism that the downturn may not be as deep and as protracted as many fear."