Australian Business Investment Continues To Contract

Post by Sharat on May 28, 2009 · Under Australian Economy · Comment

New data from the Australian Bureau of Statistics has shown that business investment dropped substantially in the first three months of the year.

Capex or new private capital expenditure declined by 8.9 per cent between January and March to stand at $22.96 billion. Analysts had forecast a 5 per cent reduction.

As the Australian economy starts to contract, businesses have faced increasing pressure to cut costs, which has resulted some even cutting back on capital expenditure, which has been one of the pillars of economic growth in the last few years.

The report released on Thursday also contains future investment plans.

The estimate for the amount of investment that will occur during the 2009/2010 financial year now stands at $76.93 billion, which represents a drop of 4.5 per cent from the previous forecast which was made back in February.

When the Government announced the Federal budget earlier this month, it forecast a contraction in business investment as high as 18.5 per cent in the current fiscal, before resuming its growth trajectory during the next fiscal.

A recession is defined technically by two consecutive quarters of negative growth.

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