Recession pushes Australia down economic rankings

Ever since the Howard Government opened the immigration flood gates in the early-2000s:

Australia’s economy, as measured in per capita terms, has been on a downward trajectory:

As shown above, real GDP per capita growth has been falling for around 15 years, with the Australian economy experiencing its first annual fall in per capita GDP since the Global Financial Crisis.

The slump in Australia’s growth has also seen Australia slide down the global economic rankings, according to Fairfax’s senior economics correspondent, Shane Wright:

Australia, despite its growth, has simply not been growing fast enough. And, because of our stellar population growth (which in itself is accounting for much of our economic expansion), we have to share what we do produce with far more people.

To put that in some perspective. Australia’s GDP per capita (in Australian dollars) has lifted by 6 per cent since 2012.

In Spain (measured in euros), it’s climbed by 15.3 per cent. In New Zealand (in Kiwi dollars) it’s lifted by 8.5 per cent.

France, the Netherlands, South Korea, the UK, Germany and the United States are among a host of other countries where GDP per capita in their own currencies has lifted at a quicker clip than in Australia.

On the global rankings of GDP per capita, Australia is still a top-10 nation but is slipping rather than rising.

The below charts highlight Wright’s point.

Australia’s real per capita GDP growth has underperformed all major economies and regions this decade, as illustrated below using OECD data:

The gap underperformance has also worsened materially over the Coalition’s term in government:

Of course, it is not just per capita GDP that is in recession, but household incomes too.

Real per capita household disposable income (HDI) has fallen by 0.5% over the past seven years:

Worse, Australia’s real per capita HDI growth was the lowest among OECD nations over the five years to 2019:

No matter which way you cut it, Australian households are experiencing recessionary conditions. And it is only Australia’s turbo-charged population growth that is keeping the economy from experiencing a ‘technical recession’, even though this is coming at the expense of productivity, amenity, housing affordability, and wage growth.

For Australian businesses and policy makers, it is much easier to import migrants and report headline GDP growth than earning it the hard way through rising productivity and living standards.

Unconventional Economist
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  1. This is elucidating and incisive analysis.

    If only the media and population paid more attention to these figures instead of the headline GDP figure which means little if anything for actual Australian living standards (which are clearly in decline).

    • Ain’t enough time in the school curriculum to learn economics and civic governance… need to learn diversity training, be able to peel off gender pay gap statistics off by heart and recite the evils of being white first … I mean there’s on;y so many many hours in the day.

  2. The economy is going so well that GDP per capita (lately), and household income (for years) is going backwards but no worries, there’s no “recession”, apparently, so it’s all good. Wonder if “consumer confidence” has some connection to this?

    How good’s Straya? The miracle economy. hahahahaha

  3. Monetary policy and mass urbanisation population growth are all part of the asset inflation story. GDP per capita might be going backwards, wages might be in the gutter, but asset holders are dancing a jig.

    • When the commodity earnings start to reflect the downturn in commodity prices, throwing the terms of trade into reverse and the AUD into the mud, it’s going to irreversibly puncture this empty bubble economy. Then wages will struggle to meet debt commitmentments. Spending will collapse and that will be that, the government will not be able to stop it., Not too long to go now.

      • We’ve been hearing that for a long time. In fact i’ve paid off my house in the time bears on this blog have been crying crash. The purpose of modern monetary policy (MMP lol) is to protect asset holders, with the market contextual laudable economic goal (and mindless environmental stupidity) of encouraging consumption, and there is still tremendous room to do this.

        • hmmm true, but Oz got a colossal second wind from China, which despite a sharp but brief interruption, has supported the consumption side up to now. We got massively lucky and thought and mistaked that for our financial brilliance, so we went on a second binge, with OS help. We’re not going to get lucky a third time, though I don’t see a sharp slow down, just a gradual squeezing until incomes and debts start rubbing hard together.

        • “… there is still tremendous room to do this.”

          To the extent that further monetary debasement can occur, then yes, you are right. But the end of the road arrives when the debasement has gone too far and the currency is abandoned by global investors and inflation arrives like a Force 10 hurricane. Then it’s over. For good.

          • Call me when the end arrives, because it has been 18 months away ™ for ever. The mistake is to think its a market, it’s not.

        • It may not be a market but that doesn’t mean it won’t break under intense pressure. Unless, of course, you believe the laws of economics can be repealed. In which case, yes, there is no point waiting for the end.

      • That was the great lesson from the GFC. Assets are not a market. Markets only exist in things that don’t matter, like kids selling lemonade at a school fete.

    • But morgs, this is all fine cause: the ‘wealth effect’. It’s a real thing – it says so in every good economics text book. 😉

  4. Wow – what a message!
    Excellent clear objective measurements proving:
    1- how hopeless our political leadership is
    2- how useless the media is
    Australia with all its advantages has absolutely no excuse for such poor performance. The fish rots from the head!
    Thank you MB.

    • “1- how hopeless our political leadership is”

      That tends to ignore the reality…. they are really, REALLY useful, for those that give them their orders.

      “2- how useless the media is”

      They’re ‘purchased’ vessels too. You think Carlos Slim buying the NYT and Jeff Bezos buying the WaPo as loss making ventures is about really rich men turning these around to make more money?

      Or about shaping the public’s view at a (slight) loss, so all their other ventures continue to make money in ways an otherwise angry public would prevent?

      “Australia with all its advantages has absolutely no excuse for such poor performance. The fish rots from the head!
      Thank you MB.”

      These outcomes are entirely predictable….

      The saying, ‘play stupid games’ win stupid prizes’….. the same goes for “Vote progressive politics, get dumb governance” …. it’s as sure as B follows A in the alphabet.

      Governance on the principal of ‘compassion’ is easy, but it has never averted any society turning into anything other than a cluster f*ck…

  5. Jumping jack flash

    ” And it is only Australia’s turbo-charged population growth that is keeping the economy from experiencing a ‘technical recession’,”

    How good is growth?

    No recessions here, mate

  6. BoomToBustMEMBER

    The property blip is a thin bubble likely to pop shortly, we are most definitely in a consumer recession that will start flowing through the rest of the economy shortly as demand dries up. Businesses are very quiet at present. Victoria is spending massive sums of money on infrastructure with declining revenue. I am curious to know how we are going to pay back the billions of $$$$ in the environment with little left to sell.