Australia s Outlook

Transcription

1 Australia s Outlook IBISWorld Newsletter July 217 Phil Ruthven AM, Founder IBISWorld As Australia starts , we can look back over the previous financial year and notice several interesting trends. Australia grew at a slow pace in , a percentage point below its 3.2% per annum long-term average. Australia is prone to a recession every eight-and-ahalf years, but has avoided one since , and looks as though it will miss one in too unless there is a huge external shock; which seems unlikely at this juncture. If so, we could have over 3 years of recession-free growth into the 22s; a trend never previously experienced in Australia s modern history of almost 23 years. The first chart suggests we could grow at 3.% in This may be a little hopeful, but this rate of growth would make us the sixth-fastest growing nation in the world s 2 biggest nations. However, like almost all the OECD nations, Australia s longer term growth trend is gently downwards. The slowing growth pattern in Western nations is due to scarce leadership, vision and direction in our new age of Economic growth Largest economies (PPP ranking) India China Indonesia World Iran Turkey Australia South Korea United States Brazil Saudi Arabia Spain Mexico Canada Russia Germany France United Kingdom Taiwan Japan Italy ECONOMIST/IBISWORLD: 1/7/217 Australia s economic growth Annual real GDP growth (%) in quarters through March 217 (forecast to June 221) Averages 3.% pa (over 2 years) 3.2% pa (since 1987) IBISWORLD: 1/7/217 services and ICT, and economic reform. Historically, Australia did better than its peers in the s and most of the s, due to outstanding reforms from 1983 to 27 under Hawke, Keating and Howard/Costello leadership. That stopped in 28, and shows no sign of revival under either the Coalition or Labor parties in the immediate future. This comes at a time when the Eastern Countries GDP has

2 overtaken the West, China has overtaken the United States, India has overtaken Japan and Indonesia has overtaken the UK, France and Italy. Luckily, we are part of the Asia Pacific, the largest region in the world and the fastest growing of the eight regions. The vast majority of our trade, tourism and immigration now takes place within Asia (including the Indian subcontinent region). The chart below reminds us of what pulls our economy along: the markets for consumption, investment and exports. The Australian marketplace Year through March % Exports 16.9% Exports of goods and services 62.% Consumption expenditure 2.6% Capital expenditure 3.9% Government capex 6.3% Dwelling capex 1.4% Business capex 1 47.% Household consumption 1 Includes inventory changes 2 Mainly on behalf of households 6.4% Federal Government consumption 9.1% State and Local Government consumption 2 Gross national turnover of goods and services $2.8 trillion ABS/IBISWORLD: 1/7/17 Export growth is typically strong and rarely negative, and has never caused a recession over the past six decades. Exports of goods and services % change (constant price terms) four-quarter moving average to March % pa (over 2 years).6% pa (since 1987) ABS/IBISWORLD: 1/7/217

3 Likewise, consumption expenditure growth has not caused a recession over the past six decades and indeed has never been negative over that period, as seen below. Total consumption expenditure growth Four quarter moving average through March % pa (over 2 years) 3.% pa (since 1987) Recessions do not occur from collapsing consumption expenditure (mainly households), but from capital expenditure, which goes severely negative every 8. years Lorem ipsum ABS: 1/7/217 Only capital expenditure has gone sufficiently negative over the past six decades to cause a recession. However, it needs to plunge by over 9% to do so; and that has only happened twice since (in -83 and ). And it seems unlikely to do so in or 218. Capital expenditure growth Four quarter moving average through March % pa (over 2 years).3% pa (since 1987) Recessions occur when GFCE falls more than 9% ABS: 1/7/217

4 Most of our jobs growth has occurred in our service industries over the past five years. As the chart below shows, we have managed to create seven times more jobs over this period than we have lost. However, as the Australia s new & lost jobs By industry, five years to March 217, share of total basis The nation created over final chart shows, seven times more new jobs 1.3% 1.8% productivity in our than it lost Arts and Personal and Recn Services Other Services service industries % 1.% Health and Construction has generally been Social Assistance 4.% Retail 1.4% poor. This is where 6.% Mining 3.3%.7% Agriculture Manufacturing our government Transport/Postal 1% needs to remove Rental and 2.8% Real Estate Finance and barriers to Insurance efficiency, increase 12.% Info Media competition, and Telcos 13.% and where the Prof and Tech Services 1% 11.4% service industries 13.8% Wholesaling Utilities Hospitality themselves need 4.2% Lost jobs to innovate and Admin and Support 132, 13.% take advantage Education 9.3% Government Admin of the emerging New jobs and Safety Net new jobs 97, 82, IBISWORLD: 1/7/217 digital age utility of fast broadband, AI, big data and analytics. Some are already heading down this track, but most aren t yet. They need to. Australian productivity growth 1-year growth to March 217, % pa (IGP/hour worked at prices) Info Media and Telcos Finance and Insurance Agriculture Wholesale Trade Rental and Real Estate Retail Trade Admin and Supp Serv Construction GDP Health and Social Ass. Mining Public Admin and Safety Prof and Tech Services Personal and Other Transport and Postal Arts and Recreation Manufacturing Education Hospitality Utilities -1.9 Includes importing/marketing All industries IBISWORLD: 1/7/217

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