7 March 2019
Bob Cunneen, Senior Economist and Portfolio Specialist
Australia’s economic growth – real GDP vs real GDP per capita
Source: Australian Bureau of Statistics.
The Australian economy is back in the slow lane. Australia’s real economic growth was only 2.3% for the year to December 2018 (blue line). Consumer spending growth is also subdued at only 2% annual growth given the challenges of high debts and falling house prices. Housing construction has hit the brakes as well with tighter lending standards, higher interest rates for investors and concerns over the perceived oversupply of apartments.
Australia’s growth performance is even more disappointing when adjusted for population growth. Australia’s Real Gross Domestic Product (GDP) per capita shows annual growth at only 0.7% (red line) which is the 2.3% real economic growth result less the 1.6 % annual population growth.
However Australia is not yet in the breakdown lane. Economic growth is still much healthier than the painful experience with the Global Financial Crisis from 2007-2009.
As the Reserve Bank of Australia (RBA) has recently noted, the Australian economy “is being supported by rising business investment, higher levels of spending on public infrastructure and increased employment.” Low interest rates, a weaker Australian dollar and the forthcoming income tax cuts should also help the economy regain speed. So while Australia’s growth is slow, essentially it’s too early to call for roadside assistance on the Australian economy.
1 ‘Media Release - Statement by Philip Lowe, Governor: Monetary Policy Decision’, rba.gov.au/media-releases/2019/mr-19-05.html, Number 2019-05, 5 March 2019.
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