The benchmark All Ordinaries Index rose nearly 1 percent, to 2,989.5 points. A year ago, many economists expected that recession in East Asia, which absorbed two-thirds of Australia's exports in 1997, would hit Australia hard, especially because most of its exports consisted of commodities whose prices had tumbled. Those changes include tariff cuts, a floating exchange rate, privatization of state-owned enterprises and better corporate and financial supervision. Downsizing in the corporate sector will affect job creation and, ultimately, depress consumption. Prices for many of the commodities that Australia exports continue to fall.
Some analysts say the downturn for Australia is already starting to bite.
Mr. Subbaraman said he expected Australia's GDP growth to slow sharply to below 2 percent this year. The government is forecasting growth of 3.25 percent in the year ending in June and 2.75 percent in the ensuing 12 months. ''To come through a situation where the region is in recession, then to have growth slowing to 3 percent, would still be a fantastic achievement,'' said Peter Costello, Australia's treasurer.