Economy shrinks

Government data also showed that the Australian economy shrank for the first time in eight years in the last quarter of 2008, with a 0.5 per cent contraction.

This comes despite government attempts to ward off the effects of the global economic crisis with two stimulus packages worth more than $32.5bn.

For the year, the economy expanded 0.3 per cent, according to government data, and Australia is not yet officially in a recession, which it defines as two consecutive quarters of contraction.

But it looks to be headed that way, with the previous quarter registering only a 0.1 per cent growth.

The global economic downturn has brought about a rapid reversal of fortune for Australia's economy, which had enjoyed 17 consecutive years of growth, primarily fuelled by a resources boom from exports of commodities such as iron and copper ore to rapidly growing Asian economies such as China and India.

But the global financial crisis has caused demand to slide, and in December, Australia saw its trade surplus shrink by 40 per cent.