Australia, which is one of the few developed economies not to have fallen into recession like its counterparts throughout the world, could see its economy contract in the January to March period.

The warning came from Treasurer Wayne Swan after the country has been hit by flood and cyclone disasters, which has led to a fall in coal and agricultural exports.

Speaking to an Australian newspaper, Mr Swan said: There is no doubt that the natural disasters will thump our economy in the first quarter of this year.

As it stands, you couldnt rule out a negative in that quarter, he warned.

However, he remains optimistic and believes “the longer-term prospects for the economy are strong.”

Prior to the floods and cyclones, economic growth had slowed, expanding by just 0.2% in the July to September period, down from the 1.1% growth reported in the second quarter.

As a result, annual economic growth was 2.7%, significantly lower than the 3.3% previously reported.

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