With the release of last year's economic data, Australia has maintained the longest record of continuous non-recession among developed countries—25 years—and may break the previous record of 26 years held by the Netherlands. From 1982 to 2008, there was only one quarter where economic growth showed a decline.
According to data released by the Australian Bureau of Statistics on Wednesday, benefiting from the rebound in commodity prices, this resource-rich country saw a GDP growth of 1.1% in the fourth quarter of last year, reversing the unexpected decline in the third quarter and avoiding a technical recession. Since June 1991, Australia has not entered a recession. The annual economic growth rate for Australia last year was 2.4%, with strong growth in exports and consumer spending, and an increase in corporate profits and government expenditure. Scott Morrison, the Australian Treasurer, expressed satisfaction with the 2% quarter-on-quarter rebound in business investment, which ended several consecutive quarters of decline. "Our economy continues to perform better than the OECD average, and the economic transformation has shown some results."
Australia's GDP unexpectedly declined by 0.5% in the third quarter of last year, marking the worst performance since the financial crisis. The unemployment rate rose to 5.7% in November, leading to growing doubts in the market about whether Australia can maintain its continuous economic growth for 25 years. Rating agencies S&P and Moody's had already placed Australia on a watch list for a potential downgrade of its sovereign credit rating, putting the country's 30-year AAA sovereign credit rating at risk.
Australian Finance Minister John Fraser stated on Wednesday that although key resource export prices have rebounded, the economic outlook for Australia remains "very stable." There are signs of improvement in the global economy, but the impact of U.S. President Trump's trade protection policies and their effects on free trade still need to be assessed. In the current complex international environment, Australia is still in a period of transition from an export-driven economy to a more broadly expanding economy.
The economic transformation in Australia is not easy.
Australia is attempting to gradually shift from a traditional resource-exporting economy to more diverse industries, such as the development of the service and tourism sectors. However, the reality is not optimistic, as corporate investment expenditure declined by 2.1% quarter-on-quarter in the fourth quarter, worse than the market expectation of a 0.5% decline. Due to concerns about future uncertainties, an increasing number of large Australian companies are choosing to hold cash. According to CommSec data, cash holdings among Australian companies rose by 9% to AUD 108 billion in the second half of the year. Mining companies are opting to distribute large dividends as profits rebound rather than expand investments. The two giants, BHP and Rio Tinto, have announced plans to increase dividends in recent weeks.
On the employment front, although Australia's unemployment rate continues to decline, many new jobs are part-time positions in the service sector, such as cashiers. This also limits the growth of residents' wage income and the rise in inflation levels, with residents' income declining by 0.5% quarter-on-quarter in the fourth quarter of last year.
The low interest rate of 1.5% has fueled a real estate boom and pushed the number of loans issued by major banks to historical highs. In Sydney, the economic center of Australia, housing prices rose by 19% last year, with a large influx of foreign buyers and speculators into the market. The Australian central bank has expressed concern over the current situation where the mortgage-to-disposable income ratio for ordinary people is close to 190%. This may become a "stumbling block" for Australia's economic transformation.