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Agence France-Presse

Australia, once dubbed the “Goldilocks economy” for avoiding the pitfalls of the global financial crisis, has seen 27 years of uninterrupted expansion – unprecedented in the developed world.
But the outlook appears increasingly bearish, and resilient Australia’s faltering growth could be the canary in the coal mine for the world economy.
The economy grew just 0.4 per cent in the first three months of this year, after near-zero expansion in the second half of 2018.
Strip away gains from population growth and the country is technically in a recession.

“The big issue is the consumers,” said National Australia Bank chief economist Alan Oster.
Like many advanced economies, Australia’s unemployment rate is not too bad, but like elsewhere there has been a troublesome mixture of high personal debt and stagnant wages.
In response, Australians are being more thrifty – spending less on eating out, paying little heed to almost constant high street discounts, and, crucially, spending less on rent and accommodation.
House prices in Sydney have now fallen almost 15 per cent from their peak two years ago.
The Australian economy didn’t diversify enough and it exposed itself to a situation where Australian households are highly indebted
Gabriele Gratton, University of New South Wales
The downturn has exposed weakness in the Australian economy that had been masked by China’s insatiable appetite for Australian commodities.
The economy now looks less like Goldilocks and more like the emperor with no clothes.
That is a big lesson for the rest of the world as it picks up the pieces after the financial crisis, said Gabriele Gratton of the University of New South Wales.
“The Australian economy didn’t diversify enough and it exposed itself to a situation where Australian households are highly indebted,” Gratton said.

Chinese growth also contributed to the sharp rise in housing prices as both locals and foreigners piled into the market, particularly in the major cities Sydney and Melbourne.
But the Chinese economy has been losing momentum in recent years, reducing the demand for commodities and properties in the sun.
“If prices do not collapse, then nothing happens. But if prices do collapse, it will cause the type of [problems] that we’ve seen in Ireland or in Spain,” Gratton said.
Eyeing China, US teams up with Canada and Australia on key minerals
The Reserve Bank, which just a year ago appeared more likely to raise interest rates, has reversed course and cut, with more cuts expected.
With interest rates already so low, stimulus spending could be on the cards. But both the central bank and the government have limited room for manoeuvre.
“The problem is you don’t have the policy instruments that we can pull now that we pulled in the global financial crisis,” Oster said.
Australia’s biggest casino company stung as Chinese VIPs spend less
Despite the pessimism, most economists do not believe Australia will slip into recession.
The Australian dollar has been weakening, boosting exports, state and federal governments have been splashing out on public services such as health care and infrastructure, and population growth remains strong.
Prime Minister Scott Morrison has promised to cut taxes and red tape.
But forecasts over the last year have been repeatedly over-optimistic.
Central bank governor Philip Lowe has taken the unusual step of asking the government to spend more – lest the porridge go cold.


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Australia

End of ‘Goldilocks economy’? Australia braces for slowdown as consumption falls, Chinese demand for commodities shrinks

A worker at a factory in Geelong, Australia. Photo: EPA-EFE

This photo taken on June 26, 2019 shows a man using his phone outside a department store in Sydney. - Australia's record-breaking economic run isn't about to end because of a ban on plastic bags -- as one lobby group spuriously claimed -- but consumers are buying less, offering a cautionary tale for the rest of the world. (Photo by PETER PARKS / AFP) / TO GO WITH -AUSTRALIA-ECONOMY-GROWTH' FOCUS BY GLENDA KWEK

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Sydney Opera House seen through a Chinese flag, with an Australian flag in the foreground. Photo: AFP

Scott Morrison, Australia's prime minister, speaks during an event hosted by Asialink and Bloomberg in Sydney, Australia, on Wednesday, June 26, 2019. Australia is urging Indo-Pacific nations to step up their commitment to free trade as the worsening fallout from the U.S.-China impasse threatens global growth. Photographer: Brendon Thorne/Bloomberg

epa07621431 A view of the Luoma Lake (964) Fuchi class fleet replenishment ship (L) and the Xuchang (536) Jiangkai II class frigate (R) of the People's Liberation Army Navy, after they arrive at Garden Island Naval Base in Sydney, Australia, 03 June 2019. Australian Prime Minister Scott Morrison said it was a reciprocal visit after Australian naval vessels visited China and dismissed suggestions the timing was contentious given the anniversary of the Tiananmen Square massacre was on 04 June. EPA-EFE/PETER RAE AUSTRALIA AND NEW ZEALAND OUT

Australia reassures investors over coal ban at Chinese port

Coal stocks fell and the Australian dollar remained under pressure on Thursday after news of the ban. Photo: AFP

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Photo: Alamy

***ONE TIME USE ONLY, PLEASE CLEAR THE COPYRIGHTS BEFORE RE-USE - OTUO*** Chinese businessman Huang Xiangmo. Photo: handout

epa06383793 Australian Labor senator Sam Dastyari holds a press conference in Sydney, New South Wales, Australia, 12 December 2017. Dastyari has quit the Senate amid intense scrutiny of his interactions with Chinese businessman and political donor Huang Xiangmo. EPA-EFE/BEN RUSHTON AUSTRALIA AND NEW ZEALAND OUT

epa07272588 Australian Minister for Foreign Affairs Marise Payne poses for a photograph after arriving at the Ministry of Foreign Affairs in Bangkok, Thailand, 10 January 2019. Payne is on an official visit to Thailand to sign a new Thailand-Australia Memorandum of Understanding on Cyber and Digital Cooperation and to advocate for a safe return to Australia of Bahraini soccer player with Australian refugee status Hakeem Al-Araibi, who is currently detained in Thailand since last December. EPA-EFE/DIEGO AZUBEL

FILE PHOTO: Chinese President Xi Jinping shakes hands with Australia's Prime Minister Malcolm Turnbull ahead of G20 Summit in Hangzhou, Zhejiang province, China, September 4, 2016. REUTERS/Wang Zhao/Pool/File Photo

Australia seeks to rekindle China ties with ‘turbo charged’ US$31 million foundation after Huawei ban, foreign interference claims

Australian Prime Minister Scott Morrison speaks during a press conference at Waterfront Place in Brisbane. Photo: EPA

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News

Asia

Australasia

Australia’s economy grew just 0.4 per cent in the first three months of this year, after near-zero expansion in the second half of 2018
Locals have been spending less, and slowing momentum in the Chinese economy has reduced the demand for commodities and properties in the sun


Australians have been spending less, and the slowing momentum in the Chinese economy has also reduced the demand for Aussie commodities and properties.


China-Australia relations

Australian Economy

Commodities

China economy