Thu, Sep 07, 2017 - Page 10 News List

Australia marks 26 years of growth

AP, CANBERRA

Australian Treasurer Scott Morrison speaks to reporters at Parliament House in Canberra yesterday.

Photo: EPA

Australia’s economy has grown for 26 years without a recession, an extraordinary achievement in a volatile world still aching from the global financial crisis.

However, many Australians say that they do not share in that prosperity and are going backward financially, a symptom of a hidden driver behind Australia’s economic success — population growth.

Data released yesterday by the Australian Bureau of Statistics showed that the economy had grown in the three months through June for a 104th quarter without a technical recession, which is defined as consecutive quarters of economic contraction.

The Australian economy grew by 0.8 percent in the second quarter, faster than the sluggish 0.3 percent in the first quarter, and 1.9 percent for the year.

Half the improvement was due to consumer spending, a consequence of population growth providing more consumers. Increased exports and a surge in government spending also contributed to the stronger result.

Some economists said after the first quarter that Australia’s unbroken recession-free run broke a world record for continuous growth previously held by the Netherlands. However, others point to Japan avoiding technical recession for more than 33 years until 1993.

Many economists say that GDP alone can paint a misleading picture of an economy such as Australia’s.

They also say that GDP needed to grow faster to deliver wage growth to Australia’s expanding ranks of workers.

Commonwealth Bank of Australia senior economist Gareth Aird said in a report in July that some of the weaknesses in the Australian economy were papered over by one of the highest population growth rates in the developed world, mostly generated by immigration. Australia’s population grew by 1.55 percent last year.

Annual wage growth is at its lowest since Australia’s last recession ended in 1991.

Underemployment, a measure of people with jobs who want to work more hours, was near a record high, Aird found.

GDP per capita, a measure of the economic growth share for each consumer in an ever-expanding pool of consumers, was the lowest since the global financial crisis.

“Per capita measures of the economy suggest that growth in living standards has stagnated and for some sections of the resident population, in particular younger people, it has gone backward,” Aird wrote.

Reserve Bank of Australia Governor Philip Lowe said recently that “our strong population growth has flattered our headline growth figures.”

A growing population requires more homes and housing construction remained at a high level in the data for the second quarter.

The central bank recently announced that Australia’s household debt-to-income ratio had reached an all-time high of 190 percent — one of the highest levels of indebtedness in the world.

The Australian rate is continuing to grow faster than wages.

Lowe blamed the trend on escalating real-estate prices, a record low base interest rate of 1.5 percent and low wage growth.

Australian Treasurer Scott Morrison yesterday said that payrolls had increased by 0.7 percent in the second quarter and 2.1 percent for the year, but this reflected more people in jobs and higher wages.

“Improving the incomes and wages of ... Australian workers remains our most important challenge,” Morrison said. “As the labor market continues to strengthen, we believe wages can be expected to improve.”

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