Never listen to media economists. Today the ABS released the national accounts which show that the GDP/person shrank by 0.4%. However, the media economists will simply repeat the headline figure of 0.2% GDP growth.
Of course, it is GDP/person that matters, not just GDP.
In the last five quarters, GDP/person has been -0.4%, -1.4%, 0%, 0%, -0.4%… which seems to indicate that we are still not out of recession. Or perhaps (if you count 0% as positive) that we could be facing a double-dip recession.
I’m not trying to be pessimistic here. Australia is still performing relatively well compared to the rest of the world and I don’t expect the economy to fall apart. But what we are seeing now is the hangover from the stimulus party. About a year ago the government borrowed from overseas to throw around a lot of money. One consequence was a slightly higher rate of personal consumption earlier this year. Another consequence is that the Australia dollar has appreciated, leading to lower net exports. In the September quarter, net exports declined by $5 billion, which reduced economic growth by 1.6 percentage points.
In other worrying news, private investment also continues to detract from growth (this time by 0.2 percentage points). The strongest contributor to growth was an increase in private non-farm inventories (adding 1.1 percentage points to growth) and government investment (adding 0.3 percentage points).