Australia's economy has been booming for years

The fall is unlikely to come as much surprise either to policy-makers or investors, given the tough times afflicting economies around the globe.

Despite a crippling drought Australia has thus far escaped the worst of the downturn, with the Australian dollar at three-year highs, growth solidly above 3% a year and exports doing well.

But with consumers - and businesses too - now apparently losing their bottle in the face of continued stock market losses and impending war, the country could yet succumb to the same problems as elsewhere.

Bricks and mortar

March's consumer confidence reading, according to the Westpac-Melbourne Institute regular survey, was 97.6, a 2.1% fall from the month before to a 22-month low.

In February the fall had been even more marked, down 7.8% to below the 100-point level which separates optimism from pessimism.

The combination suggests that there could be trouble in store for Australia's retailers, the biggest of which - Coles Myer - is already reporting a slowdown in sales growth.

On Tuesday, National Australia Bank said business confidence had dropped to its worst level since 11 September.

But the housing market is staying vibrant, as Australians move into bricks and mortar as a safer investment than equities.