Australian consumer confidence has been restrained by falling house prices, and government opponents who express pessimism about the economy aren’t helping to revive sentiment, Trade Minister Craig Emerson said.
“We do have an opposition that is determined to talk the economy down,” Emerson said on Sky News today. “The trash talking is having a negative effect.”
Consumer confidence in May was near the lowest level this year as concern about the global economy outweighed central bank interest-rate cuts and resource-fueled domestic growth, according to a Westpac Banking Corp. (WBC) and Melbourne Institute survey. Government reports this week showed gross domestic product grew 1.3 percent in the first quarter from a year earlier, the biggest expansion since 2007, and employment gained by 38,900 jobs in May.
The reports showed Australia has one of the world’s fastest-growing developed economies, with an unemployment rate of 5.1 percent. That’s less than half the 11 percent level of joblessness in the euro area.
The local currency advanced 2.2 percent this week, the biggest weekly rise since early December.
Still, the nature of public discussion “is unrelentingly gloomy,” Reserve Bank of Australia Governor Glenn Stevens said in a speech yesterday. Even before recent events in Europe, “we were firmly determined to see out glass as half empty,” he said, adding that his view is “Australia’s glass is at least half full.”
Stevens’s view “is that talking the economy down is not helping consumer sentiment, and that’s a realistic assessment,” Emerson said.
Australia has what the central bank and government officials have called a two-speed economy, distinguished by resource-rich regions in the north and west that are powering growth and hiring workers, and struggling tourism, manufacturing and retail industries across the south and east.
“This is not new in Australian historic experience, but perhaps the difference in the speeds is pretty noticeable,” Emerson said. The government is implementing a profits-based mining tax, so households can share the benefits of the mining boom, he said.
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