Australian economy expands 3.3% in last 12 months, marks 25-year stretch of growth

The Australian economy expanded 3.3 percent in the last 12 months to June, improving further from the 3 percent growth rate in the year to March. It has been the best growth rate since 2012 and marks 25 years of no recession.

Reckoned the past six and 12 months, the current growth rate is higher than the 2.75 percent which Treasury says is Australia’s long-term speed limit, reports Sydney Morning Herald. All economic indicators are up, with terms of trade having been stabilised and exports increasing.

Inflation is at 1 percent, interest rates at 1.5 percent and unemployment at 5.7 percent. However, the pace of growth is expected to ease as business investment could be approaching bottom as what happened in non-mining states.

But Craig James, chief economist of Commonwealth Securities, points out that while mining construction boom may be over, the housing construction boom has replaced it. He says there are no signs that the country’s record expansion would come to an end.

With annual growth rate rising to a four-year high, James says, “We are set to pick up the gold medal for the longest expansion of a developed economy in the modern era.” The only country that Australia has to beat is The Netherlands which enjoys a 26-year stretch of continuous growth of 103 quarters, while Australia just logged its 100 quarters, reports ABC.

But analysts warn that the Aussie economy is not bullet-proof since it has the potential to enter recession with the transition from the mining boom. They cite that while national unemployment rate is 5.7 percent, in Western Australia, it is 6.3 percent and 6.4 percent in South Australia.

However, James still stresses the economy is basically in very, very good shape, although, “some people are doing better, some people are doing worse.” The analysts point to domestic demand in WA down 2.5 percent which means the state was in recession.

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Source: IG UK