Australia’s economy has recorded its worst performance in over 30 years, notwithstanding the COVID-19 period. The ABS reported that GDP growth in the April-June quarter was just 0.2%, with annual growth reaching only 1 percent – marking the slowest growth since 1991-92, outside of 2020, when the country was recovering from a recession. On a per capita basis, accounting for the recent high levels of immigration, GDP fell 0.4% during the quarter – a trend now in its sixth consecutive decline. Compared to last year, it dropped 1.5%.
Australia’s economic activity has been significantly impacted by rising interest rates and high inflation, leading to reduced consumer spending. The Reserve Bank of Australia (RBA) raised interest rates 13 times between May 2022 and November 2023 in an effort to curb inflation, which has worsened cost-of-living pressures. Household consumption in the June quarter declined by 0.2%, marking the largest drop outside of COVID since the global financial crisis. Economist Callam Pickering noted that the economy is now propped up by government spending and population growth, while many Australians feel the effects of a recession despite positive growth figures.
These factors have placed growing pressure on Prime Minister Anthony Albanese’s Labor government, as inflation remains above the RBA's 2-3% target. With approval ratings dropping, concerns about the country’s economic outlook are becoming increasingly widespread.
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