New government figures have confirmed the nation’s economy has slowed notably, recording its second straight quarter where the economy shrank on a per-capita basis.
What does this mean? GDP, or gross domestic product, measures the total value of goods and services produced by a country. This is used to assess how that country’s economy is going.
On a per-capita basis, Australia’s total GDP growth level has shrunk over two consecutive quarters. It shrank at 0.1 per cent and 0.2 per cent in the September and December quarters respectively, according to the Australian Bureau of Statistics.
A recession is defined as two consecutive quarters of negative economic growth, which the nation hasn’t experienced since 1991.
In per-capita terms — a widely-used proxy for living standards — the economy has not experienced two consecutive quarters of negative growth since 2006.
Annual growth has fallen to just 2.3 per cent — well below the Reserve Bank’s 2019 forecast of 3 per cent.
“Growth in the economy was subdued, reflecting soft household spending and a decline in dwelling investment,” ABS chief economist Bruce Hockman said.
.@annelisenews asks the Prime Minister to clarify his comments that a Labor government would drive the economy into a recession. @ScottMorrisonMP: Well, I can’t predict how bad things are going to get under Labor.
— Sky News Australia (@SkyNewsAust) March 5, 2019
The Morrison Government has urged Australians to stick with it to ensure the economy remains in “fundamentally good shape”, despite the release of these figures.
Treasurer Josh Frydenberg said Australia’s economy was growing faster than any G7 nation but the United States.
Going forward, he says the economy needs the “steady hand” of economic management that the Coalition can provide.
He said the country experienced a “moderation in growth” in the latter half of 2018.
“The moderation in part reflects the impact of the drought, lower mining investment and as we continue to move from the construction to the production phase, as well as a decline in residential construction from record levels,” he told reporters in Canberra. “It is now more important than ever for Australia to stay the course with the Government’s plan for lower taxes, more trade and more jobs and record spending on infrastructure.”
He also noted the economy was still growing overall and unemployment remained low.
“The unemployment level has fallen to 5 per cent, its lowest in seven years, and to a remarkable 3.9 per cent in our largest state New South Wales, a level that hasn’t been seen since the 1970s,” he said.
But Labor’s shadow treasurer Chris Bowen disagreed.
“This is a damning indictment of the economic stewardship of Scott Morrison and Josh Frydenberg,” he told reporters in Sydney, adding the Government has “lost the moral authority to campaign and talk about the economy”.
“Per head of population, the Australian economy has gone backwards. This is the first time this has happened since 2006. It’s only the third time it has happened since 1991,” he said.
He also tore down the Government’s spruiking of unemployment figures, noting strong wage growth had not followed.
“What we’re seeing is that wages are not growing strong enough, that productivity is not growing again … what we see is that profits continue to grow but wages simply do not,” Mr Frydenberg said.
Labor leader Bill Shorten told a business event in Sydney the next election would be a “referendum on wages”.
The latest national accounts may prompt economists to renew their prediction the central bank will be forced to cut the official cash rate at least once in 2019. The RBA on Tuesday held the rate at 1.5 per cent for the 31st consecutive month.
— with AAP