Australia has created a record for enjoying the longest streak of growth among developed nations. The latest figures from the Australian Bureau of Statistics show that the country has recorded a growth of 0.3 percent for the first three months of the current year, making it the 103rd consecutive quarter of growth.
That is 26 consecutive years of a recession-free economy – which is an incredible achievement, considering the fact that a recession is defined as two successive quarters of negative growth. The GDP growth was better than expected as several banks had anticipated poorer results.
National Australia Bank had estimated negative 0.1 percent decline in growth while Commonwealth Bank had estimated a growth rate of 0.1 per cent.
The positive result was primarily due to improvements in household expenditure which contributed 0.3 percentage points to the GDP, as well as government consumption which contributed 0.2 percentage points. However over a 12 month period, the growth was just 1.7 percent which is the lowest since 2009, hinting at a slowdown. This latest number puts the GDP growth below the central bank’s forecast of 2-3 percent.
Treasurer Scott Morrison said that the continuous growth highlighted the resilience of the Australian economy but warned that the expansion was not fully secure. He blamed the drop in net exports on the weather, noting that Cyclone Debbie had affected economic activity. Some analysts have said the government needs to re-look at polices to boost growth.
In a statement Michael Workman, a Commonwealth Bank senior economist said,
The weakness in today’s data extends beyond the weather, and the slowdown in the domestic economy has occurred at a time when the global economic backdrop has improved. This suggests that policymakers have their work cut out for them if Australia is to post the kind of growth outcomes they have forecast over 2017.
The Reserve Bank of Australia has decided to leave interest rates untouched at 1.5 percent. The central bank cited poor growth in real wages, a volatile housing market and falling prices of iron ore and coal as reasons. Reserve Bank Governor Philip Lowe has however reaffirmed that the country will experience continued growth over the next few years to reach 3 percent.
Morrison has also reiterated the forecast of sharp growth in coming years but said the federal budget was revising its GDP estimates downwards for the moment. She went on to say that the government will be closely monitoring growth forecasts at six months intervals.