Australia is in the midst of its first recession since 1991, the head of the country's central bank bluntly stated on Tuesday, though he also saw a range of reasons to be confident in the longer-term outlook.

In a speech titled "The Road to Recovery", Reserve Bank of Australia (RBA) Governor Glenn Stevens said there was no precedent for escaping a global recession in which virtually all of the country's trading partners were contracting.

"I think the reasonable person, looking at all the information available now, would come to the conclusion that the Australian economy, too, is in recession," Stevens told a gathering of company directors.

This was the first time the governor explicitly acknowledged a recession, a politically charged term in Australia.

He was pipped at the post, however, by Prime Minister Kevin Rudd who on Monday said: "The worst global economic recession in 75 years means it's inevitable that Australia will be dragged into recession."

A recession is usually defined as two consecutive quarters of economic contraction. Gross domestic product (GDP) had already declined by 0.5 percent in the fourth quarter of 2008 and another drop looked likely for the first quarter of this year.

Indeed, minutes of the RBA's April 7 policy meeting released earlier on Tuesday showed the central bank had cut its outlook for inflation and economic growth, predicting a contraction for the first quarter as well.

The central bank decided to cut its key cash rate by 25 basis points at that meeting, taking rates to a record low of 3.0 percent and bringing its easing since September to a huge 425 basis points.

Stevens said nothing about the outlook for further rate cuts, noting just that past easing, coupled with substantial fiscal stimulus, would be felt for some time yet.

The Labor government has announced spending packages worth over A$52 billion (US$36 billion) in recent months and more is expected in its annual budget in May.

All this stimulus had helped Australian households stay relatively less depressed than in many other developed nations, Stevens added. Business confidence had taken a harder hit and it was likely that: "business investment spending is in the process of declining sharply."

Australia's terms of trade -- what it gets for exports compared to what it pays for imports -- were likely to fall after several years of spectacular growth.

Yet, Stevens emphasized that the coming drop in the terms of trade would likely reverse only part of the previous surge, in part thanks to the resilience of China, Australia's single largest trading partner.

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Stevens saw several reasons to have confidence in the long-run fortunes of Australia. These included political stability, sound public finances, a relatively healthy banking system and a strong regulatory framework.

Australia also remained open to international trade and investment and was lucky to be so exposed to Asia, still the most dynamic growth region in the world.

"There are rather few countries that have the potential to offer so attractive a proposition to international capital, and to their own citizens, over the years ahead," declared Stevens.

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