The balancing act we had to have

Sep 5th, 2008 | By David Harper | Category: Opinion

Alan Wood: The political debate on economic policy, both inside parliament and out, is largely puerile. The only useful, if obvious, bit of advice from Kevin Rudd this week was that there are more tough times ahead for Australia’s households; sorry, working families.

The question we want answered is whether the growth slowdown under way will be another mid-cycle correction as in 1996 and 2001, a hiccup in our remarkable run of economic growth, which is what the Reserve Bank of Australia intends and the Rudd Government fervently hopes. Or will it be the long-predicted business cycle recession, last seen 17 years ago in the recession we had to have? It is tempting to say that it looks a bit like 2001, but corrections and recessions can look much the same in the initial stages of a downturn.

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