Meltdown recovery will take up to two years
Recovery from the global financial meltdown could take up to two years and the Federal Budget could be in deficit next year, a leading economist has told the Association of Superannuation Funds of Australia national conference.
Credit Suisse Asset Management economist and former Federal Government adviser Barry Hughes told the conference that the system had “collapsed under its own weight” and that a two year recovery period would seem normal in such circumstances.
Hughes was speaking as part of a three-person panel at the conference at which the head of Australian equities at Perpetual, John Servior, said the markets were at their most volatile in 50 years and that, to date, the market had suffered its third worst-ever 12-month period.
However, he said there were a lot of sensible signs emerging that the market might be beginning to bottom.
For his part, Hughes said the danger existed that the financial crisis would soon become an economic crisis.
He said the financial crisis might be over within three or four months, but the economic crisis would last a good deal longer.
Looking at the Australian economy, he predicted the Federal Budget might be in deficit next year “for the first time in yonks”.
The chief executive of JANA investment advisers, Ken Marshman, said even though many people had predicted that a problem was emerging, it could not be said that the outcome could have been avoided.
“It was like watching a slow-moving train wreck,” he said. “But we we’re on the train.”
AUTHOR
Mike Taylor
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