In an interview with Anthony Black of Compare, Harvey claims that he is optimistic that Australia can avoid a recession. He told Black that falling interest rates and the Federal Government's $10 billion stimulus package will sustain economic growth, but at a slower rate. "I think the Government acted relatively early and the economy is still in good shape with unemployment marginally above 4 per cent,'' Harvey said.
However he did admit during the interview that unemployment could rise up to 7 per cent despite predicting the Reserve Bank will cut the official cash rate to between 3 and 4 per cent during the next 12 months. "If the US has two quarters of negative growth and then a positive quarter of 1 per cent growth, then Australia should avoid a recession,'' Harvey says.
On a personal note he admits that Harvey Norman's retreating share price during the past 12 months has stripped him of more than a $1 billion in wealth.
"But say the US has four quarters of negative growth, then we might not be able to avoid a recession. These are things no one knows. No one can say, ‘I know what's going to happen'. This is the most complicated financial situation (credit crunch) in 100 years, possibly ever. We didn't have complicated derivatives at work during the 1929 stock market crash.''
Recently Harvey reported that He says sales at Harvey Norman and Domayne stores were down 5.8 per cent over a 28-day period to October 19 when compared to the same period last year.
