Latest figures show Australian economy ‘25 years recession-free’

7 Sep 16

Australia’s economy can now boast a quarter of a century without recession after official figures showed the economy grew 3.3% in the year to June.

The country’s treasurer Scott Morrison praised the news, and described it as a tribute to every Australian who goes to work, runs a business, or invests in new products and equipment.

“This achievement is their achievement,” he said. “They are the engine room of the Australian economy, and this is an extraordinary performance that they have achieved.”

The Australian Bureau of Statistics, which published the data today, said growth in the second quarter was driven by government and household spending.

However, while the figures represented an achievement for the country’s economy in the long run, growth in the second quarter of this year dropped by a half to 0.5%, compared with the first few months of the year.

The ABS noted that total investment was flat, exports fell while imports rose, and slowdowns in both the construction and mining sectors were propped up by public investment.

Morrison said public demand was driven by the government listing hepatitis C drugs on a benefits scheme and its procurement of $180m worth of Chinook helicopters.

Public spending and investment added one percentage point to quarterly growth overall, driven by a 1.9% and 15.5% increase in these areas, respectively.

This is in line with recommendations from institutions like the International Monetary Fund and the OECD, which have called on nations to increase high quality public investments, where there is fiscal room.

However, while the strategy of investing in areas like infrastructure is supposed to boost productivity and generate jobs, underemployment in Australia is at near-record levels.

Others have asked how far public investment can be used as the main lever for growth in a country where the federal government is struggling with a budget deficit and public debt.

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