“I wouldn’t say anyone’s job was safe.” Sometimes politicians tell the unadorned truth.
Kim Carr, Labor’s Minister for Innovation, Industry, Science and Research, did that recently when he warned about forthcoming massive job losses in Australia.
Apart from saying anyone could lose their job, he also told 3AW that “these are difficult times, we are facing acute stresses throughout the Western world as a direct result of a global recession”.
What the Minister says about large job losses looming as a consequence of the global economic crisis is true. No number of stimulus packages is going to change that.
This is not rocket science.
The Australian economy is one of the most open and globally integrated economies in the world. If the rest of the world tanks, so do we.
The rest of the world is tanking.
Australia is a capital importing nation. This means we depend on lender or investor countries (in the past the US and Europe, but increasingly China and the Middle East) to supply us with capital to build up our productive capacity and output.
In turn we sell goods (raw materials and food for example) to the rest of the world.
The Australian newspaper annualised the 2008 Gross Domestic Product fall in major economies on February 25. (This means the newspaper multiplied by four the December quarter 2008 figures.) It is not pretty.
Here is a table based on my re-working of their graph. I have added in Australia based on Wednesday’s GDP figures (-2 per cent on an annualised basis) and Canada (-3.2 per cent). Going forward these are likely to be underestimates for most countries for the year as the recession deepens. We are at the start of the decline, not its end. The rope on the bungee jumper is about to snap.
First published in En Passant on March 4, 2009.
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