Fed: Economic problems akin to 1980s/1920s: Garnaut

AAP General News (Australia)
12-03-2004
Fed: Economic problems akin to 1980s/1920s: Garnaut

A prominent economist says Australia could be heading for a downturn like the Great
Depression and the recession of the 1990s because of fundamental economic problems.

Professor ROSS GARNAUT says the nation's spiralling current account deficit -- the
balance betweeen exports and imports -- is a symptom of the major problem that will soon
hit the economy.

Profressor GARNAUT says the downturns of the 1890s, 1930s and early 1990s were all
preceded by relatively low interest rates, high current account deficits, strong levels
of consumer confidence, and a debt-funded boom.

In a speech at the Australian National University, Professor GARNAUT's said a key problem
is the continuing failure of exporters to make ground overseas, which is contributing
to the huge current account deficit.

He says the economy can rely on domestic consumption for only so long.

AAP RTV sw/sb/gjr/rt

KEYWORD: ECONOMY GARNAUT (CANBERRA)

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