Australia’s lost decade is about to turn into a lost generation

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Not that we think GDP matters much but given it’s the accepted benchmark of success then let’s give ourselves a fail, from the IMF today:

We’re not going to rebound like that. No way. Domestic demand is toast. My best guess is we’ll look more like Canada: 2019 1.5%, 2020 1.8%, 2024 1.7%.

Why? There are no growth drivers left:

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  • dwelling construction will shrink for two years;
  • business investment won’t move much;
  • household consumption will be constrained by weak income and fading house price gains;
  • public investment has peaked but consumption will remain decent.

There’s is nothing else to drive domestic demand as the private sector remains conservative, the terms of trade fall away putting the clamp on fiscal spending and policy remains paralysed.

Australia’s lost decade is about to turn into a lost generation.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.