For the economics whizzes out there! (1 Viewer)

[JulianStafford]

The Australian economy returns to growth in the December quarter 2016. Profits surge 20% with rising commodity prices. Wages fall, consumption up and household saving down. Global interest rates up. Household debt at 125% of GDP. Piketty (Capital in the 21st Century) argued that profit growth > economic growth in the long term is a causal factor in recessions.



SOOOO Where do you think Australia is headed?

UNSW
Bachelor of Economics 2017

 

[supR]

Well we are told that we have had 26 years of consecutive growth without any recession, which is great.

BUT if you look at GDP per capita over the 26 years, the story is very different
Especially considering that wages are falling whilst debt is rising doesn't come together for a very good mix either

 

[acehsccoaching]

The data is a great starting point to assess the economic pathway of a country but if you really want to understand the future, you have to look behind the data at the 'drivers of growth'. Further, Australia has been in what is called a "structural recession" even though we have had 26 years of growth. Australia's current situation has a significant amount of growth driven by the residential and commercial property markets (which some seasoned economists believe is not real - i.e. a bubble).

Australia is currently at an inflection point in our growth story, with mining investment on the decline one would expect that commodity exports decrease in their significance over time - particularly as the growth engines of the last ~2 decades start to taper off (esp. China). This means that to keep its head above water Australia needs to find new sources of growth through structural change in non-mining sectors. Have a flick through this speech from the RBA if you want to know more (https://www.rba.gov.au/speeches/2016/sp-ag-2016-09-13.html) as most of their predictions are playing out.