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SYDNEY: Australia's once booming economy is facing tough times due to global turbulence, but growth will begin picking up again next year, Prime Minister Kevin Rudd said Friday.
Rudd moved to reassure Australians as he comes under mounting political pressure from high interest rates and inflation, growing job losses and flagging business confidence as a decade of stellar growth ended.
"We believe that into the period of 2009 you'll start to see economic growth picking up," Rudd told Fairfax Radio.
Rudd pointed to Reserve Bank of Australia forecasts that indicate economic growth should improve by the June quarter of 2009.
"If you go (with) the forecasts which were released by the Reserve Bank in August you see growth by the June quarter 2009 improving to two and a quarter (per cent) and then by the end of next year to two and a half," he said.
The Reserve Bank has said it expects growth of just 2.0 per cent in the year ending December 2008, down from its previous forecast of 2.25 per cent and almost half the long-term average of 3.9 per cent enjoyed since 1960.
Australia posted 4.3 per cent growth in 2007, but since then a slowing of the global economy has put the breaks on Australia's growth while inflation has become a growing problem.
Rudd said the US financial crisis triggered by a sub-prime mortgage-linked credit crunch was being severely felt around the world, leaving Australia's economy facing tough times ahead.
"It sits tough, really tough," Rudd warned.
"I'd much rather be up front about that with the Australian people rather than pretending that it's any different. It's a big challenge. And it's been a big challenge frankly since day one."
The government was intent on reducing inflationary pressure to avoid further interest rate rises after 12 successive hikes and was investing in the country's long-term productivity growth through education reforms, Rudd said.
- AFP/yb
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