Australia: the lucky country no longer?

published 9 December 2016

Australia's remarkable 25-year run of recession-free growth may be coming to an end. Figures published on Wednesday showed that GDP fell quarter-on-quarter by 0.5% in the three months to the end of September, much worse than economists had forecast. It is only the fourth dip in GDP in a quarter of a century. On an annual basis, GDP grew 1.8%, which is well below the long-term trend.

The numbers will be an embarrassment to Malcolm Turnbull's conservative government which won an election in July on a pledge to deliver growth and jobs and brought fears of recession (a recession is defined as two successive quarters of falling GDP). It's too early to conclude Australia's record of growth is definitely over, says Capital Economics' Paul Dales.

Third-quarter growth is weak partly because the first-half was so strong. But other data is not encouraging. Annual job growth has slumped to a two-year low. Mining investment continues to sink and non-mining investment is not growing enough to counteract the fall. A steep fall in consumer and government spending also dragged on the economy.