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Can we lead the world out of recession



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John Hewson Leader of the Opposition M e d i a R e l e a s e

39/92 26 February 1992

CAN WE LEAD THE WORLD OUT OF RECESSION?

The Treasury "line" which will no doubt be run in the Economic Statement tonight is that the world economy is about to pick up as the US economy resumes growth in the second half of the year and counteracts the slowdown now evident iii the Japanese and German economies.

Australia will supposedly ride on the back of this recovery.

But this comfortable scenario had a setback last night when US consumer sentiment fell to its lowest level since December 1974 (see chart). And Alan Greenspan warned that the recovery could falter, yet again.

US CONSUMER CONFIDENCE INDEX SOURCE THE CONFERENCE BOARD. 1985» 100

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70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92

Meanwhile Germany has had three successive falls in GDP.

And Japan is facing a depressing outlook with falling production, rising stocks and surveys showing that capital spending may actually fall in the next fiscal year.

COMMONWEALTH PARLIAMENTARY LIBRARY MICAH

Mr Keating will have to convince foreign investors that he can sustain a recovery based on massive pump priming of spending through this Statement, and the August Budget to come, while exports are likely to be constrained by slow or, in some cases, negative growth in our foreign markets.

We must hope he passes this test because he is running an

enormous risk here.

Of course, Mr Keating has continuously demonstrated that he is prepared to run with a high risk strategy for the nation in an attempt to get short term political gain.

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