The supreme irony of the latest listless GDP data is that private demand has been supported by “brisk” public spending. There are serious questions about the government’s competence to run the economy, reports Alan austin.
Australia continues to lag behind the rest of the world.
Many of the latest published results are at historically low levels and push Australia even lower in the world rankings. The latest GDP figures released this week corroborate that Australia is in a serious rut, saved only by demand for minerals mined from the ground and exported.
The mainstream media once again preferred to focus on tangential good news, mainly by broadcasting the government’s narrative:
Annual GDP growth
The increase in gross domestic product (GDP) for the June quarter, announced by the Australian Bureau of Statistics (ABS) yesterday, was a miserable 0.48%. This brings annual GDP growth to just 1.44% for the year to end of June. (This analysis uses seasonally adjusted numbers. Trend data, preferred by some, shows even worse results.)
This is the weakest annual growth for a fiscal year since 2002-03, during the global recession of the early 2000s. Prior to that, the year with weaker growth than today was back in 1991 during Paul Keating’s âRecession We Had to Haveâ.
Australia’s ranking among the 36 rich and developed countries that are members of the Organization for Economic Co-operation and Development (OECD) has slumped to 23rd, as shown in the chart below.
This is the lowest ranking Australia has had since the records began. Historically, Australia has always been in the top twenty. During the Global Financial Crisis (GFC) from 2008 to 2013, the ranking was mainly in the top five. Australia reached number one ten years ago, in 2009, as shown below.
Construction activity collapses
The ABS measures total construction across the country on a quarterly basis. This includes homes, farms, factories and other business premises built by the private sector and infrastructure built by state and federal governments. During times of global stability, this will increase every year in well-run economies, with occasional jerks.
Australia’s last fiscal year saw a catastrophic drop in construction total of 9.41%, the worst reversal since the global recession of 2001. The 2018-19 setback is the fifth decline in six years of Coalition mandate. It is unprecedented. In fact, since the surveys began in the mid-1980s, there have only been nine negative years. The current government has chaired five.
ABS measures productivity by calculating the GDP generated per hour worked for each quarter. For most of Australia’s history, this number has been steadily increasing, as it does in most successful economies. As Australia emerged from the global financial crisis, productivity increased for 16 consecutive quarters from 2011 to 2014. Impressive.
It has fluctuated erratically since then, but appears to have stuck at around 100 index points since Q3 2016. Until that rises again, there is little hope that prosperity will continue. of Australian workers is improving. There is no sign of this under current economic conditions.
Retail record low
Total retail sales for the last fiscal year were $ 325.4, an increase of just $ 9.6 billion or 3.04% from the previous year. Given that the population grew by 1.77% and inflation by 1.6%, which is a decrease in real dollars compared to the population.
The result for 2018-2019 was only slightly higher than the abysmal 2.56% of the previous year, the worst result on record. The year before, it was only $ 3.13. Thus, for three consecutive years, the growth of retail sales has been less than 3.2% and therefore less than the increase in population and prices. This is the only time this has happened in 36 years.
The average growth for the previous 30 years is 6.10 percent.
Housing starts stagnate
A good indicator of prosperity is the number of new homes built each year. These include old houses replaced by new ones, housing estates for expanding populations and new vacation homes for families who can afford them.
The ABS records the number of dwellings approved for construction on a monthly basis.
In the last fiscal year, only 188,000 dwellings were approved, down 18.7% from the previous year. That year was lower than the 2015-16 fiscal year, which saw 239,000 homes approved.
Housing index down
The trade economy shows both rises and falls in home values ââfor 35 developed countries. The latest data for 2019 shows that only seven of those 35 homes lost their home value. These are Chile, Italy, Finland, Iceland, UK, Sweden and Australia.
A story of mismanagement
There is no excuse for the Australian economy to collapse so badly on these indicators, which all reflect the well-being of its citizens.
In addition to these six areas of failure for which the data arrived this week, let us recall the 11 other variables analyzed here in July:
- Australian dollar value
- Global employment
- Youth unemployment
- Hours worked per person
- Average weeks the unemployed spend looking for work
- Workers over 65 forced to return to work
- Interest rate
- Budget deficits
- Government debt
- Interest paid on debt
- Stock market performance
All of these have steadily improved in most countries thanks to the recent post-GFC global boom. They deteriorated in Australia.
By supporting the unemployed, Australia comes a cold, motherless last stone
Booming exports and corporate profits
Australia is expected to remain the world leader on most of these measures, as was the case between 2009 and 2013. Exports are at record levels. The trade balance is in record surplus. The current account returned to surplus – for the first time since Gough Whitlam was Prime Minister.
Corporate profits are also booming in Australia, as they are elsewhere in the world. The percentage increase in profits over the past three years, as reported by ABS, was 22.2%, 10.0% and 10.9%.
Policies don’t work
Obviously, large corporations dine out while the majority of Australians see their income, wealth and quality of life gradually diminish. The Coalition’s management of the economy allows foreign predators to extract Australia’s wealth with little or no return to the Australian people, and allow local businesses to escape the tax burden that the majority of workers are unable to avoid.
These policies serve neither the economy nor the citizens.
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