Sitting quietly in a corner of the economic map, Australia doesn’t get many headlines. It is not often in the news but now an anniversary has also drawn attention to how well Australia is doing. It has been 25 years since Australia’s last recession. That means that the country has gone through exactly one hundred economic quarters without a crash or a bubble bursting.
The economy of Australia expanded last quarter at the fastest annual pace it has seen in four years. Exports have been going up. It looks like Australia has got its very own economic miracle going on. That isn’t making a lot of noise on the economic stage. But the figures paint a very clear picture of success.
The Australian dollar stayed stable at $0.7662. In the year up to June, gross domestic product (GDP) went up 3.3%, up from 2.9% the previous quarter.
The value of goods and services went up 0.5%, when compared to the first quarter. At the same time output climbed by 1%. Even though the chances were incremental, they stayed on the positive side.
Australia found itself in pre-election times recently and that meant more government spending. As well as that, there were gains in average household spending and in building new homes. This all stimulated growth in the previous quarter. And it offset a decline in investments in the mining industry, which has been happening for the past three years.
The most important factor to growth was international trade. Hundreds of billions that were spent on mining projects meant a lot of resources. That led to more exports and a stronger economy. Trade accounted for 2.2 percentage points of the total growth in the year up to June.
At home, domestic final demand rose by only 1.2%. Household consumption rose by 1.6%.
The need for an even “stronger growth” was mentioned by the Reserve Bank of Australia. It was the motivation for one of the bank’s moves on the financial market. In August, the RBA cut interest rates to unprecedented lows of 1.5% in August. There is a chance for another rate cut by Christmas, analysts say.
The Future for Australia
The results from the Australian Bureau of Statistics are very good. Annual GDP for Australia was A$1.65 trillion ($1.26 trillion). That means around A$68,929 for each one of the country’s 24 million people.
Annual growth was a fantastic result for Australia. It places her well ahead of the United States (with 1.2%) and the average for the European Union (with 2.2%). It even did better than the UK (with 2.2%) and Germany (with 3.1%.)
Australia has a resource-rich economy that has been stable for a significant amount of time now. It has enjoyed the longest economic growth of the developed countries. So is there anything that could bring the Australian economy down at this point? Are there any risks?
Well, much of Australia’s economic growth comes from the trade of commodities. One of the most important countries to which Australia exports resources is China. Right now, China’s economy is slowing. And that could have an impact on Australia’s future economic development.
Image source: Wikipedia.