According to the quarterly report, Government spending measures and a rebuilding of inventories were helping to support economic activity right now, but they would not be enough to secure a sustained improvement in the global economic outlook.

“High unemployment, tight credit and rapidly rising borrowing by Governments (which threatens to crowd out private investment) all bode poorly for the short-term outlook,” D&B said.

D&B director of corporate affairs Damian Karmelich said it was too early to suggest that the global economy was firmly on the path to recovery.

But he said Australia was in a good position to deal with any future challenges, given the large cuts to interest rates and Government stimulus measures.

“Our nation appears to be one of the only OECD countries to have survived the crisis with just one quarter of negative economic growth and we are well placed to manage any further shocks that occur.”

D&B said the low level of Government debt provided ample scope for further stimulus if the outlook for economic growth worsened.

The D&B report noted the World Trade Organisation had recently predicted a 10 per cent decline in global trade volumes this year, which was a downward revision to its previous estimate.

“With this in mind, recent actions to increase trade barriers among countries that have traditionally had lower obstacles to trade is concerning,” the D&B report said.

“This is particularly the case when countries with lower barriers to trade will be better placed to take advantage of the upsurge in trade volumes as the global economy recovers.”

Australia was one of those countries, the report said, but upturn in trade volumes was expected to be slow.

– AAP