Many feared that the economy Down Under was in recession. But then data out today didn’t merely point to growth, it pointed to something a lot better than that.
1991: It was the year when Sir Tim Berners Lee announced some weird concept called the World Wide Web, Starbucks opened its first outlet, President Yeltsin of Russia banned the communist party from the country, and Freddie Mercury died. It was also the last time that the Australian economy suffered recession.
Many feared that 2016 would see the recession boomerang finally return. The third quarter of 2016 saw a 0.5 per cent contraction. Most economists define a recession as two successive quarters of contraction, so if the final quarter also saw contraction, then the Australian economic 26-year winning streak would have come to an end.
Say one thing for the Aussies, they may not be very good at sport, but they do know how to stage an economic recovery.
Australian GDP rose by 1.1 per cent quarter on quarter in the final three months of 2016.
A big surge in commodity exports helped, but household consumption and private investment also rose, like a cricket ball hit by an Aussie batsman into the air.
But will it last? Will Q4’s big hit reach the boundary, heralding a year of rapid growth, or will the ball fall into the hands of economic malaise?
Some fear that Q4 may have been something of a one-off. For example, Paul Dales, Chief Australia & NZ Economist at Capital Economics said: "We believe that most of the boost to national income from higher commodity prices will result in higher corporate profits rather than faster real GDP growth. As such, we still believe that real GDP growth will be disappointingly weak this year at between 2.0 per cent and 2.5 per cent.”
Then again, a growth rate like that is not a bad score, not by the standards of western economies, anyway.