SYDNEY (The Straits Times/ANN) – Twenty-eight consecutive years of growth, but experts flag stagnant wages and weak business investment.
Australia recently posted an impressive milestone as its economy marked 28 consecutive years of growth – a world record.
Yet, two different portraits of its economic health have emerged: While the federal government insists that the nation is performing strongly, economists are much less optimistic.
Despite avoiding a recession for more than a generation, Australia posted growth for the year ended June 30 of just 1.4 per cent – its weakest showing since the aftermath of the 2009 global financial crisis.
Consumer spending is low and housing investment shrank by 4.4 per cent in the April-to-June quarter as property prices slumped.
But Australian Treasurer Josh Frydenberg insisted that the nation was in relatively good shape, pointing to other places that have experienced a slowdown.
He said Australia’s economy was “remarkably resilient”, noting that employment was growing, despite the impact of both the trade war and a severe domestic drought.
“Let’s not forget that Germany, the United Kingdom, Singapore, Sweden and other countries all experienced negative growth over the (April-to-June) quarter,” he told 2GB Radio.
“Yet, Australia’s economy continues to grow in the face of those challenging economic headwinds.”
Australian Prime Minister Scott Morrison is insistent on delivering a budget surplus next year, which would be the first since 2008.
It seems likely, as soaring iron ore and coal exports to China have pushed Australia’s trade balance to record highs.
Last week, data showed Australia recorded a current account surplus for the April-to-June quarter of AUD5.9 billion, its first such surplus since 1975.
But many economists believe the government’s cheery picture downplays worrying signs, such as weak business investment, poor productivity and stagnant wages.
Household debt – at about 200 per cent of the average income – is among the highest in the world, due to people taking out hefty mortgages in the recent property boom.