25 Recession-free Years for Australia 2

Friday, September 9th, 2016
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Australia is closing in on a world record for the longest period of economic growth in the modern area

The nation’s gross domestic product (GDP) rose by 0.5 per cent in the quarter and 3.3 per cent in the year to June, the latest Australian Bureau of Statistics figures show.

That annual figure is the fastest growth in four years and crowns 25 recession-free years for the Australian economy.

UBS economists say the economy is rebalancing better than most expected after the mining boom.

“Obviously, with growth dominated by government spending and net exports but only moderate ongoing gains in consumption and housing, some will argue the economy has a soft underbelly,” the UBS team said in a note.

“But it’s precisely this versatility of drivers that has now delivered Australia 25 years of uninterrupted economic growth.”

Standing in Australia’s way for the world record is the Netherlands’ 26-year run of expansion – but just three more quarters of growth Down Under would steal the title away from the Dutch.

The main contributor to Australia’s growth in the June quarter was domestic demand, which rose 0.6 per cent, supported by ongoing rises in household and public consumption.

Even though household spending growth halved in the quarter, it still contributed to 60 per cent of GDP.

Meanwhile, booming government spending provided a big lift in quarterly GDP, with consumption rising 1.9 per cent and investment soaring 15.5 per cent.

Royal Bank of Canada chief economist Su-Lin Ong was optimistic about the 2.3 per cent rise in the terms of trade and a rise in plant and equipment investment shown in Wednesday’s report.

Ms Ong said the improvement indicated those two factors should be less of a drag on the economy in the next 12 months.

However she warned that currently booming public expenditure was not sustainable in the long term.

Ms Ong also said there were challenges facing the household sector, including stagnant wages growth, a patchy labour market and high levels of debt.

“The residential construction upswing and rising asset prices have lent support, but this is unlikely to be the case in 2017 with the consumer (spending) starting to fade,” she said.

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  1. Brandon Miles

    This is undoubtedly a fantastic achievement which deserves to be celebrated.

    That said, there should be lessons learned.

    Foundations for much of our success lie upon much of the reform process put in place by the Hawke Keating government and continued in the early years of the Howard government as well as (b) the fiscal discipline of the Howard years .

    In recent years, however, the reform process has largely slowed and we have started again to live beyond our means.

    Let's learn from our past success. Let's continue the process of any sensible reform and push further into becoming an innovation nation. Let's also get back to living within our means.

  2. Barry B.

    We've much to be proud of – as much as he's reviled Kevin Rudd played an all but heroic role in navigating the national economy safely through the treacherous waters of the GFC almost a decade ago.