Australia's PM Kevin Rudd Riding High Despite Downturn

Support for Australian Prime Minister Kevin Rudd remains strong despite the economy flirting with recession, but rising joblessness is denting his once-stellar poll ratings, a new opinion poll showed on Tuesday.

Lauren Victoria Burke / AP

Rudd, who faces re-election by late next year, dropped three points as preferred leader to 61 percent, still well clear of conservative opposition leader Malcolm Turnbull on 21 percent, a Newspoll in the Australian newspaper showed.

Backing for Rudd's centre-left Labor government also slipped two points to 56 percent, 12 points clear of the conservatives.

Some Australian media have speculated that Rudd could call an early election if his reform agenda runs into difficulties with the upper house of parliament, where the balance of power rests with Green lawmakers and independent senators.

Australia moved a step closer to recession last week when the country reported its first economic contraction in eight years during the fourth quarter. The economy shrank by 0.5 percent, surprising economists who had tipped slight growth.

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Year-on-year, the economy grew by 0.3 percent, the slowest pace of expansion since the country's last recession in 1991. The government hopes its recently announced A$42 billion ($26.6 billion) stimulus package, including cash handouts and infrastructure spending, will help the economy weather a downturn tipped to see joblessness hit 7 percent, up from 4.8 percent now.

The independent central bank, which has slashed interest rates by 400 basis points since September, last week decided to hold the official cash rate at 3.25 per cent.

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