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GDP growth but black clouds on the horizon

Today the Australian Bureau of Statistics released the December quarter National Accounts data which gives us the rear-vision mirror view of how the economy has been travelling at a distance of 3-months. The data confirms that the Australian economy sidestepped the global economic crisis with just one negative quarter of real GDP growth and is moving towards trend growth. However, restoring trend growth is nothing to be proud of. The fact remains that the current performance of the Australian economy will not be sufficient to achieve and sustain full employment. The RBA claim yesterday that getting back on trend growth is a justification for tightening monetary policy just reinforces the neo-liberal policy dominance – that some underutilised labour is required to fight inflation. While the RBA monetary policy tightening will not help growth, the real threat to our prosperity will come in the May budget when the federal government will announce its fiscal austerity plans. Combined with the deflationary impacts of similar moves by other governments and the impending meltdown of the EMU region, the GDP growth we are enjoying today may not persist. And all this will be driven by the mindless ideology of the deficit-terrorists.

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