Another per capita recession beckons in 2023


The federal government’s Budget on Tuesday will downgrade Australia’s economic growth forecast to just 1.5% in 2023-24. This is one percentage point lower than the Treasury had forecast in April, ahead of the federal election. Lower real GDP growth of 3.25% is also now expected for the current financial year.

The drop off in GDP will primarily be caused by weaker household consumption due to the Reserve Bank’s aggressive interest rate hikes and rising energy costs:

Australia's real GDP

Per capita recession beckons.

Given Australia faces record immigration flows next year, and population growth well north of 2%, the GDP forecast would mean a per capita recession for Australia.


Per capita recessions in Australia are actually very common, as illustrated in the next chart:

Quarterly GDP growth

Per capita recessions increasingly common in Australia.

 In fact, Australia’s real per capita GDP growth was abysmal for the better part of a decade, tracking around 1% growth per annum since 2014:

GDP Growth

Per capita GDP growth in the gutter.

Basically, strong immigration fueled population growth has long powered GDP at the national level (more inputs in people means more outputs in GDP). However, everyone’s slice of the GDP pie has barely grown.

The Albanese Government has doubled down on the same failed growth model by ramping immigration to record levels in place of focusing on productivity-led growth.


In turn, Australians face another ‘lost decade’.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.