Australia's record-breaking economy
It’s official - Australia is the new record holder for the nation with the longest run without a recession. But how?
Australia has long been known as ‘the lucky country’, but it takes a whole lot more than luck to survive without a recession for 103 quarters, or almost 26 years. This feat, confirmed by the Australian Bureau of Statistics (ABS), means Australia is now the world record holder for the longest time without a recession.
A recession is generally agreed to be two consecutive quarters of negative growth. Some negative growth is allowed but, like any good mistake, it’s only excusable if it doesn’t happen twice in a row.
The last recession is remembered well by Australians thanks to a quote from then Treasurer Paul Keating, operating under Prime Minister Bob Hawke.
In November 1990, Keating fatefully referred to a period of negative growth as “the recession we had to have”.
Avoiding negative movement for such a long time since then is impressive. The fact that the 26-year period included events that sent the rest of the world tumbling, including the dotcom crash and the Global Financial Crisis (GFC), as well as major natural disasters including flood and fire, is even more so.
What kept Australia afloat?
During the GFC, rampant demand for Australia’s natural resources from China kept the entire economy afloat as other nations languished.
Coal, gas and other minerals from beneath the ground brought great riches to the land down under. But even as the resources boom faded and China’s insatiable hunger for steel eased, the economy has continued to grow.
The ABS report shows the manufacturing industry in Australia dropping off after 2008 while the mining industry continues to rise.
Finance and construction in Australia also gained great strength from 2008 onwards, during and after the GFC, which more than made up for the manufacturing fall.
Following the announcement of the record, Treasurer Scott Morrison said to reporters; “A generation of Australians have grown up without ever having known a recession. That's a tremendous national achievement, but it's not one we can take for granted.
"Our growth continues to be above the OECD average and confirms the successful change that is taking place in our economy as we move from the largest resources investment boom in our history to broader-based growth.”
Is it all coming up roses?
The Shadow Treasurer, Chris Bowen, was quick to point out slowing growth in a Fairfax Media interview: "The Australian economy is currently experiencing the lowest annual GDP growth since the Global Financial Crisis. Australians looking for work and opportunity will take no consolation from Scott Morrison's 'better days ahead' credo."
According to a recent Austrade report, during the record-breaking growth streak, Australia has registered an average annual growth rate of 3.2%.
Prior to this momentous period, the nation’s growth spurts tended to occur in batches of seven or eight years.
Who else has come close to this recession record?
OECD accounts say Japan saw 63 quarters from 1975 to 1993 and the Netherlands grew from 1983 to 2002 before experiencing two quarters of very small decline in 1993.
Many claim the Netherlands’ growth run continued through this period to 2008, and that is the record that Australia has since broken. The good news for Australia is that it now holds the record outright, no matter how the numbers are interpreted.
Most economists agree that the future for the Australian economy is bright, with Shane Oliver of AMP Capital telling the BBC that growth should bounce back to around 3% during 2017.
The Reserve Bank of Australia puts current growth at 1.7% and inflation at 2.1%. At the same time, it says, the nation’s population is rising at 1.5% annually and unemployment is sitting at 5.7%.
The lack of extremes in these figures is the envy of the economic world, meaning Australia’s record looks safe for quite a while, yet.
About the author
Chris Sheedy is one of Australia’s busiest and most successful freelance writers. He has been published regularly in the Sydney Morning Herald, Virgin Australia Voyeur, The Australian Magazine, GQ, In The Black, Cadillac, Management Today, Men’s Fitness and countless other big-brand publications. He is frequently commissioned to carry out copywriting and corporate writing projects for organisations, including banks, universities, television networks, restaurant chains and major charities, through his business The Hard Word.