Morgan Stanley: Australia needs stimulus to avoid recession

Wednesday, November 5, 2014
By Paul Martin

HangTheBankers.com
November 6, 2014

Australia could face its first recession in almost 25 years unless authorities further stimulate the economy, Morgan Stanley said.

The nation’s economy will expand just 1.9 percent in 2015, with 1.5 percentage points of that coming from higher exports, and unemployment will climb to 6.8 percent, Morgan Stanley economists led by Daniel Blake said in a research report today.

They project the currency will fall to 76 U.S. cents by the end of next year from 87.37 cents at 11:10 a.m. in Sydney.

“The economic transition in Australia from the resources boom to east-coast recovery has stalled,” they said. “We revise our key forecasts downward, which in turn make future policy settings key to avoiding recession.”

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