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Tuesday, 25 November 2008
Page: 11204

Ms JACKSON (2:23 PM) —My question is to the Treasurer. Will the Treasurer update the House on forecasts for emerging economies and actions taken by governments in recent days to respond to the global financial crisis?

Mr SWAN (Treasurer) —I thank the member for her question. The upheaval in global financial markets is, of course, now impacting not only on developed countries but on developing countries. We have seen this most dramatically in the IMF regional outlook that was produced overnight. As we are aware, the global crisis has already delivered a recession in Europe and Japan, and the IMF is now predicting recessions in the US and the UK. The IMF regional economic outlook released overnight has this to say:

With the crisis intensifying in industrial countries, strains have spread to emerging markets. These markets, which for a while had seemed relatively insulated from the crisis, are now reeling as investors fly to safety in a context of deep uncertainty about global growth prospects.

So the IMF has downgraded growth in our region to 4.9 per cent over 2009, which is well below the 7.6 per cent growth experienced last year. This is why there is now a growing international consensus that coordinated, decisive and strong action to strengthen growth is absolutely critical in the circumstances in which we find ourselves.

The IMF said this overnight:

… policymakers in Asia need to be ready to react decisively to maintain financial stability and support growth.

This is what the Rudd government has done. It has done it with its $10.4 billion Economic Security Strategy, it has done it with its guarantees on deposits and it has done it with its wholesale term funding guarantees. Our strategy is expected to boost growth by one-half to one per cent and help to create up to 75,000 additional jobs.

Other governments around the world are also moving. Overnight, the UK government announced a fiscal stimulus package of about one per cent of GDP. We certainly welcome the UK government’s efforts to support growth. Other governments are moving as well. It is very important that governments around the world move on a coordinated basis.

Mr Hockey interjecting

Mr SWAN —But, as the member for North Sydney indicates again, those opposite simply have not got a clue about the magnitude of this crisis, its consequences for this economy or what solutions need to be put in place to deal with it. They simply have no idea of the magnitude of the challenge. But, whatever short-term politics they want to play, we on this side of the House will defend the national interest to strengthen our economy, to assist households and to assist businesses, because we are in the middle of an unprecedented global event and we must do everything within our power, using all the tools of policy, to strengthen our economy, and that is what we are doing.