AUSTRALIA is crawling out of recession, analysts here say. But when this economy starts to stand, it's going to be in a much stronger position.
The present signs aren't good. The Australian dollar has fallen 10 percent since June to its lowest level in five years, around US$0.67.
Analysts peg the fall to uncertainty over the coming federal election, a drop in commodity prices, and concern that the current-accounts deficit will balloon from A$15 billion forecast in August to A$18 billion. (The current account includes trade and international capital flows.)
Overall economic growth, moreover, has been flat. Last February, Prime Minister Paul Keating announced his One Nation package of infrastructure repair and personal tax cuts to jump-start the economy. But that plan was predicated on a growth of 4.75 percent in the 1992-93 fiscal year. The growth rate has been a measly 2 percent.
Four quarters of post-recession growth have not reduced unemployment, now at 11.3 percent. In fact, a survey released Monday by the National Australia Bank projects 12 percent joblessness by year-end.
The Reserve Bank of Australia moved to stimulate the economy by easing interest rates three times in 1992. Now the Bank is holding firm, saying Tuesday that although "the combination of low inflation and weak economic activity would ordinarily provide a case for easing of monetary policy, current nervousness in foreign-exchange markets, which follows earlier falls in the exchange, effectively precludes any such action at this time."
Exports are up an acceptable 4 percent, but imports are also up, by 19 percent according to the Australian Bureau of Statistics.
Business confidence and capital spending are down, which analysts attribute to the uncertainties of the federal election that must be called by May but may come in late March or April.
Consumers worried over job security have kept a tight grip on their wallets, with one notable exception: after-Christmas sales. "Door-buster" bargains resulted in previously unheard-of stampedes in several states in which store doors were broken.
Australia's economic struggles stem from its dependence on the world economy and on commodities - minerals and farm products - for which prices have been falling. Commodities account for three-fourths of exports.
"With the US having a modest recession, Japan in recession, and Germany going into recession, it's a difficult time. The bottom of the commodities cycle is not here yet," says Don Stammer, chief economist with Bain & Co. investment bank. Commodity price trends are "still a negative for the Australian dollar."
The farm sector has been reeling, first from three years of drought, then from winter floods that damaged what was expected to be a bumper wheat crop.
Australia's economic recovery this year is expected to be weak, comparable to that of the United States in 1992. Both nations are working off the spending and debt binge of the 1980s.
"The buildup of debt was more in the corporate sector, rather than in households, while in the US it was the other way around," says Geoff Warren, director of investment strategy with Ord Minnett, a brokerage house.
There are hopeful signs, too.
The corporate sector is gradually repaying its debt.
One of Australia's chief strengths is that it is redirecting its exports toward the fast-growing East Asian markets. Australia sends 60 percent of its exports to this region, supplying half of Japan's coal and iron imports. The falling dollar is pulling in foreign tourists, 25 percent from Asia.
Some say the capacity for recovery is high. The recession has forced businesses to cut costs and become more efficient. The labor movement has cooperated more with management to save jobs.
"There's a huge improvement in international competitiveness. With low inflation, strong growth, and the fall in the Australian dollar, we're more competitive than at any stage in our history," Dr. Stammer says. "Exports are at record levels. Prospects are that when the figure for 1992 inflation rate is announced at the end of the month, it will be 0.5" percent - the best in the industrial world.