No one’s job is safe

Table: 2008 Gross Domestic Product fall in major economies on February 25

China’s figure is probably an overestimate. It is certainly about 4 per cent below previous levels so the fall of growth in China has been more precipitous than countries like the US.

The dictatorship has admitted it needs growth of at least 8 per cent to maintain “social stability” (employment). China’s integration into the world economy means its growth will fall rapidly in the coming months.

Last year 20 million Chinese migrant workers lost their jobs and went back to the countryside. This year the figure will be much higher.

Looking at the falling growth figures, what can we say? The US, China, Japan and Germany are the world’s four largest economies, producing about 50 per cent of world GDP. (If someone knows the exact figure let me know.)

Our major trading partners are China, Japan, South Korea, Hong Kong and Taiwan.

Our growth rate is falling more slowly than that of our trading partners. It is likely to join them and accelerate to their levels as their recessions deepen.

Capital investment and lending in Australia is drying up, at the same time trade with our major trading partners is about to collapse (along with prices for our resources.)

Because we are such an open economy our recession will be deeper than many other countries.

The large run down of inventories in the December quarter shows that companies are not producing new stock but drawing on already produced goods. This is ominous.

Conservative estimates are that there will be an extra 300,000 unemployed by June next year. This is 7 per cent unemployment. Taking into account underemployment there are probably 1.5 million unemployed and underemployed in Australia (or 13 per cent of the workforce).

Double digit official unemployment now looks a possibility, and possibly by the end of the year. This is an extra 600,000 on the economic scrap heap.