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Fed: Economy offers 'rational basis for confidence': Rudd

By Jamie Duncan
09 Jun 2009 10:37 PM

MELBOURNE, June 9 AAP - Prime Minister Kevin Rudd says Australia's strong economic fundamentals offer a glimmer of hope the nation will escape the worst effects of the global recession.

Speaking at the National Small Business Summit in Melbourne on Tuesday night, Mr Rudd said there was no room for "simple, misty-eyed optimism" and acknowledged business owners faced "tough decisions" amid the downturn.

"But we have a rational basis for confidence in the future," he said.

"We have a rational basis to see our way through ... this global recession but also to build productivity drivers to power the Australian economy in the future, he said.

"The infrastructure we are building, the skills that we are investing in, and you - the women and men of business - taking advantage of those skills and that infrastructure in the future to give us a powerful trajectory not just for recovery, but building an stronger economy."

Mr Rudd said a reported rise in business confidence was an early sign of an economic recovery in Australia.

The National Australia Bank's monthly business survey, released on Tuesday, showed signs of improvement on global financial markets had businesses feeling more upbeat last month.

The survey's measure of business confidence rose 12 index points to minus two in May.

But the measure of business conditions fell four index points to minus 14.

A reading below zero indicates pessimists outnumber optimists.

"The increase in business confidence for May was the sharpest rise in business confidence since 1989," he told an audience of about 500 people.

"Business confidence is now at its highest level since February 2008.

"There is a long, long way to go. Again, we are not out of the woods yet. There may be further corrections.

"But this data suggests that Australian businesses can see some light at the end of the tunnel.

"But if the government had not acted early and decisively, Australia would already be in severe recession and the significant fall we've seen in business investment would be even sharper."