The attached note looks at Australia’s growth record over the last 28 years. The key points are as follows:
- Some have questioned – notably a recent US Federal Reserve Bank of St Luis note – whether Australia has really gone 28 years without recession because of three per capita recessions in the last 28 years.
- However, these per capita recessions were not comparable to the recessions of the early 1980s and 1990s in terms of contractions in GDP or jobs.
- There is more to Australia’s 28 years without a conventional recession than strong population growth.
The claim that Australia has gone 28 years without a recession since the early 1990s recession ended in 1991 has been subject to some criticism in recent times with the economy sliding into a “per capita recession” where economic growth has been below population growth. Some have latched on to a recent Federal Reserve Bank of St Louis analysis that noted the 28 year claim should be “taken with a grain of salt” because “Australia has had three recessions since 1991 when looking at GDP per capita, the most recent one being from the second quarter of 2018 to the first quarter of 2019.”
GDP per capita
It’s true that Australia’s relatively strong population growth helps grow the economy. And in terms of living standards it’s GDP per person or per capita that really matters and the recent slowdown in GDP growth to 1.4% year on year which is below 1.6% population growth is a big concern. I even wrote a note after the release of the December quarter GDP data entitled “Australia enters a per capita recession” (which can be found here). But it does not measure up as a conventional recession.