Australia seen to be in recession

Australia is heavily reliant upon commodities

The Australian economy is now likely to be in recession, the head of the country's central bank has admitted.

Pre-empting the official economic data for the first quarter of 2009, Reserve Bank governor Glenn Stevens said this had to be the "reasonable" conclusion.

His comments came as Prime Minister Kevin Rudd said the government would include additional economic stimulus measures in next month's budget.

The economy shrank by 0.5% in the last three months of 2008.

This decline - revealed last month - was the first time the economy had seen a quarterly contraction in eight years.

If data shows the economy shrank between January and March, then Australia will be in recession according to the usual definition of two consecutive quarters of falling output.

'Well placed'

"I think the reasonable person, looking at all the information available now, would come to the conclusion that the Australian economy, too, is in recession," said Mr Stevens.

As we frame the Budget we're going to have to make even stronger our economic stimulus strategy because unemployment will rise even further Prime Minister Kevin Rudd

Despite the warning, he insisted that Australia was well placed to weather the global recession, thanks to its close proximity and trading ties to "dynamic" Asian markets, specifically China.

"Australia's genuine long-term economic prospects remain good," he said.

The Australian government has so far agreed two economic stimulus packages totalling more than 50bn Australian dollars ($31bn; £21bn).

"As we frame the budget we're going to have to make even stronger our economic stimulus strategy because unemployment will rise even further," said Mr Rudd.

"The whole point of that is to cushion [communities] from the full impact of the recession."

Australia, which is heavily reliant upon the production of raw materials, was last in recession in the early 1990s.