Australia looks set for its worst economic performance in almost three decades, with GDP growth for the June quarter expected to drag the growth down to its weakest level in almost three decades, according to investment bank UBS.
That looks all but confirmed, with the national accounts data due out on Wednesday. If the economy disappoints even that low bar and goes backwards in June -- a possibility -- the Australian economy would be halfway to a recession, defined as two consecutive negative quarters.
Prime Minister Scott Morrison downplayed the implications, pointing out that lower interest rates and tax cuts wouldn't show up until the following September quarter, staving off a technical recession.
Despite expecting "a very difficult quarter", Morrison remains opposed to lifting government spending to boost the softening economy, slamming Kevin Rudd's one-off $900 cash bonus as a "knee-jerk reaction".
The Australia economy looks destined to record its worst year of the twenty-first century when the national figures are released on Wednesday.
Growth in the last June quarter is expected to have been anaemic. Investment bank UBS has slashed its forecasts, expecting 0.2% growth in June dragging growth for the financial year to 1.1%.
"This would continue the 'per capita recession' & be around equal weakest since the 1991 recession... GDP is likely to be such a large miss versus the RBA forecast they now need to change their commentary at their meeting [on Tuesday] albeit still probably holding rates, in our view," it said in a note.
The RBA will decide on Tuesday whether it will again cut the official interest rate or keep it on hold. Most economists are forecasting another cut either in October or November and another early next year to bring the official cash rate to around 0.5%.
That's despite RBA governor Philip Lowe acknowledging the impact of any further cuts from here will be minimal, flagging that "unconventional" measures such as quantitative easing (QE) or negative interest rates may be required if the government doesn't intervene.
Prime Minister Scott Morrison and Treasurer Josh Frydenberg have repeatedly poured cold water on the suggestion, however. Speaking to the media on Monday, Morrison said a tough quarter was always part of the plan, amid "difficult global economic times".
"All of this was part of this year's budget, in the full knowledge that we would be facing a very difficult quarter, particularly in that June quarter, and I suspect the June quarter results will be soft," he told reporters.
That's partly because the impact of recent stimulus measures aren't expected to show up until the period after.
"Let's have a look at the September quarter results which will take into account obviously the first round impacts of what came out of the tax cuts and the cash rate cuts, and then we'll go from there," Morrison said.
Former Prime Minister Kevin Rudd -- who was in office the last time Australia saw off the last serious recession threat -- just last week urged the government to ramp up spending to avoid one this time around.
Rudd's response in 2009 was a $42 billion stimulus package that put $900 in the hands of some 8 million taxpayers. Morrison on Monday appeared, unsurprisingly, dismissive of the suggestion he might go down the same preemptive road.
"Last time, you know, we had a government that reacted in a knee-jerk way, we're still paying the debt off now, and will be for the rest of this decade. What you'll get from my government is a much more sound-headed, cool-headed, measured approach, which has laid out the plans like what were in here today," he said.
The Coalition government has reiterated that it is instead committed to achieving a budget surplus.
In the meantime, Australians will just have to ride out increasingly tough economic conditions, without any hope of a cash bonus.