Australia is not heading for a recession despite weak economic growth figures, the federal government says.
Yesterday, the economy recorded its lowest growth rate in two years of 0.2 per cent in the three months to June.
The Australian Bureau of Statistics said reduced mining and construction activity weighed on growth, along with declining exports.
The government acknowledges that other countries heavily reliant on their resource sectors, like Canada and Brazil, have fallen into recession, but Treasurer Joe Hockey said Australia would not be next.
“There is no risk of recession in Australia,” he told Channel Nine.
“But, if we don’t continue down the path of delivering free trade agreements, getting rid of taxes, getting rid of regulation, and opening up more of the Australian economy to competition, then we will risk significant job losses and slower economic growth.”
Mr Hockey blamed one-off factors such as weather-related interruptions to mineral exports for the softer-than-expected figures.
He said there was evidence the transition away from a reliance on mining investment was well underway.
“Looking forward, we are already two months into the first quarter of a new financial year, and the government’s May budget is already adding momentum to the Australian economy,” he added.
“Business conditions outside the mining sector have risen to their highest level in almost five years.”
Finance Minister Mathias Cormann agreed yesterday’s growth figures did not indicate Australia was on the brink of recession.
“The Australian economy continues to grow, despite the biggest fall in our terms of trade in about 50 years,” he said.
“What we need to do is we need to keep working to lift productivity, to bring down the cost of doing business and to ensure our economy’s as competitive as possible moving forward.”
Independent economist Saul Eslake said he did not foresee a recession in Australia either.
“[But] we are nonetheless more vulnerable to any external shocks that might occur than would be if the economy had more momentum,” he said.