KEY POINTS:
SYDNEY - Business confidence rebounded in December after firms received a boost from the federal Government's fiscal stimulus package, a survey shows.
But confidence is still at levels like those experience during the recession in the early 1990s, and a recession is still expected in 2009.
National Australia Bank's (NAB) monthly business survey, released yesterday, found massive interest rate cuts and the Government's A$10.4 billion ($13 billion) stimulus package had given the retail and wholesale sectors a lift.
The survey's measure of business confidence rose 10 points to minus-20 index points in December.
A reading below zero indicates that pessimists outnumber optimists.
"Business confidence jumped 10 points in December - albeit the level of minus 20 is little better than the bottom of the 1990 recession," National Australia Bank chief economist Alan Oster said.
The NAB survey's measure of business conditions rose 11 points to minus-six index points in December.
November's minus-17 index point reading was the lowest level since late 1992, when the Australian economy started its recovery from the last economic recession.
ANZ economist Riki Polygenis said the Government's fiscal stimulus package helped to support business confidence and conditions in December, with an 18-point jump in retail sales.
Meanwhile, NAB downwardly revised its forecasts for Australian GDP growth.
Australian GDP growth is forecast to shrink by 0.25 per cent in 2009 and grow by one per cent in 2010, the survey said.
Oster said NAB's forecast meant there would be no swift recovery for the Australian economy.
"The forecasts imply a relatively mild recession - especially compared with falls in growth of around two per cent in the major industrialised economies," Oster said.
NAB said it expected the Reserve Bank of Australia's (RBA) cash rate, which sits at 4.25 per cent, to bottom at 2.50 per cent by August this year.
More workers would join the dole queue, with the survey forecasting the jobless rate to rise from the current 4.5 per cent to seven per cent by the second half of 2010.
- AAP
