This month marked the Silver Anniversary of the Australian Economic Miracle. Sound a bit too grandiose?

Well it is fact … 25 years, or 100 consecutive quarters of positive economic growth.

Our 3.3 per cent annual growth rate is the best in 4 years and showed 14 of the 19 industry sectors expanding in the June quarter. So that winning streak looks as though it will continue for a while yet.

To put our 100 consecutive quarters of growth into perspective, the Netherlands is the only first world country to have chalked up a longer winning streak … 103 quarters from the early 1980s to 2008.

In the past, Canada has reached 82 consecutive quarters, France 68, UK 67 and the US 40.

Would you believe no Australian under the age of 45 has had to endure an economic recession as a responsible adult … no double digit unemployment, inflation or interest rates.

As a result the average Australian has individual wealth in the top five in the world.

That is remarkable considering we are constantly bombarded by our politicians with talk of economic and budget crisis. And then there’s the economic problems of our major trading partners.

 

Unlock Kochie’s free video

How to Supercharge Your Savings!

 

What’s the reason for our success?


Put simply it’s mining, being beautifully positioned on the fringe of the economic powerhouse of this century and having a diverse economy with depth.

Our country is blessed with an abundance of natural resources and over the last 20 years Asia’s economic expansion has fuelled an unprecedented level of demand for this bounty.

That’s been a massive tonic for jobs, government revenues, foreign investment, and has also been key to Australia building strong ties across this increasingly important region.

The International Monetary Fund has forecast Asia contributing 42 per cent of global output by 2019, double its contribution to the world in 1980, so our position in this growth market will continue to play an important role.

On top of this, we have benefited from a stable geopolitical environment and generally reasonable economic policymaking, too. Yes, in the overall scheme of things our Federal Treasurers (from both sides of politics) have done a pretty good job.

Any weaknesses among those Treasurers has been rectified by a Reserve Bank Governor, and his board, which have done a remarkable job in using monetary policy to manage the economy.

One of the biggest risks to our growth in recent times was the global financial crisis of 2008 to 2010, which almost brought the rest world to its economic knees.

But the strength of the mining boom left us in a good position to ride out the storm, with relatively high interest rates and a strong Federal budget giving policy makers a range of monetary and fiscal options to stimulate and protect the economy.

The downturn in commodity prices over the last few years has been replaced by a housing and construction plus tourism and education exports have been strong. And, government spending and investment (both Federal and State) is making a significant contribution to growth.

It shows the diversity and depth of our economy.

How do we compare with the rest of the world?


We all whinge a lot but, frankly, the rest of the world looks at our economy in awe.

Austrade and IMF figures show that in the last 25 years, Australia is the only developed nation to have avoided recording an annual recession. By comparison Japan has had five recessions in the same period, Germany has had three and America two.

And when you look at developing countries, which typically grow at much faster rates than their developed counterparts, only China, India and Vietnam can boast the same run of consistent growth in that time.

Needless to say, we stack up exceptionally well.

That’s not to say we can’t improve and do things better, but compared with the rest of world we’ve done a great job.

Can it last?


Bad news attracts, ratings, readers and votes. So there will always be some sort of crisis being covered or forecast in the media or by politicians.

Over the last 25 years its been the Asian Financial Crisis, the Dotcom boom and bust, the Global Financial Crisis and the commodities boom and bust. Today the predictions are centred around debt crises and property price collapses.

We seem to be in a constant state of concern or as some now call it … the wall of worry. An economic recession in Australia will inevitably happen. History tells us it has to … the timing is the tricky bit.

When all the doomsayers are sprouting their gloomy predictions, there are a couple of things to remember;

  • Asia is still on our door step and still growing fast as our major trading partner.
  • We’re one of the few countries in the world to have a Triple-A credit rating from all the major ratings agencies.
  • The same RBA is still there and still doing a terrific job with monetary policy.
  • We’ve transitioned from mining to construction and infrastructure successfully so our track record in pivoting the economy in the face of a crisis is pretty good.
  • The Federal Treasurer and Government is focused on reducing debt, cutting spending and bringing the budget back to surplus.
  • We need to continue improving our productivity, and making strong investment in areas like technology, education and healthcare.
  • Compulsory superannuation (our national savings scheme) is not only building wealth for Australians but also providing a valuable source of funding for infrastructure and business investment which continues to grow the economy.
  • Our major banks are solid.
  • Free trade agreements, technology, low barriers to entry and deregulated markets means Australian business is efficient, entrepreneurial and flexible.

That is a powerful list of reasons to be confident of our future without being complacent.

So enjoy celebrating this historic economic milestone but not forget the lessons learnt on how we got here.