Joe Hockey says there is “no risk” that Australia will have a recession as he defended the government’s record on the economy.

After national accounts released on Wednesday showed the economy grew just 0.2% in the June quarter, the treasurer said the government’s policies were adding momentum to the economy.

“There is no risk of recession in Australia,” he told Channel Nine.

“But, if we don’t continue down the path of delivering free trade agreements, getting rid of taxes, getting rid of regulation, and opening up more of the Australian economy to competition, then we will risk significant job losses and slower economic growth,” Hockey said.

“Looking forward, we are already two months into the first quarter of a new financial year, and the government’s May budget is already adding momentum to the Australian economy.

“Business conditions outside the mining sector have risen to their highest level in almost five years.”

Fresh data released on Thursday showed a mixed picture of the economy. The services sector grew for a third consecutive month, and at its fastest rate in more than seven years, according to a survey by the Australian Industry Group.

But figures from the bureau of statistics said retail spending fell 0.1% in July, defying expectations of a 0.4 per cent rise.

Wednesday’s figures for the June quarter growth will translate into an annual expansion of 2.2%, which is well below Australia’s long-term average of 3% to 3.25%.



It came as the International Monetary Fund released a downbeat report on the increasing risk of a global slowdown, especially for resource-rich countries such as Australia that were dependent on Chinese growth.

But the prime minister Tony Abbott joined the defence of the government’s record and told 2GB Radio “being open for business” was in the DNA of his government, referring to his comments on gaining power nearly two years ago.

Finance minister Mathias Cormann told ABC radio on Thursday: “We are very optimistic about the outlook moving forward.” He that the government’s plan for stronger growth and jobs was on track.

The IMF said finance ministers attending a conference in the Turkish capital of Ankara needed to maintain government spending despite the still high public-sector debts left over from the 2008 banking crash.



Economies reliant on the sale of oil and basic commodities would be especially vulnerable to a decline in trade with Beijing, which has soaked up much of the world’s resources in the past decade.

“Risks are tilted to the downside, and a simultaneous realisation of some of these risks would imply a much weaker outlook,” the IMF said, reinforcing a warning this week from the IMF boss, Christine Lagarde.

The Australian dollar fell below US70c overnight for the first time in six years and was trading at US70.14c on Thursday morning.

But a weaker currency could provide support for exporters and the tourism industry, the HSBC chief economist, Paul Bloxham, told ABC television, with Australians finding domestic holidays cheaper than overseas trips and visitors having more spending power.



The shadow treasurer, Chris Bowen, said the government was in a parallel universe if it thought everything was OK with the figures.



“The treasurer’s actually got to have a dose of reality,” he told ABC radio, adding that just talking about jobs and growth didn’t deliver them.



If it wasn’t for government consumption, he said, growth over the past quarter would have been flat or negative.

