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It's official: Australia's economy is slipping and just suffered its worst year since the GFC

Jack Derwin
  • The Australian has economy has recorded its worst year in almost a decade, growing at just 1.5% -- equal to September 2009 when it was reeling from the global financial crisis (GFC).
  • The performance was dragged lower by anaemic June quarter growth of just 0.5%, with a worse annual result not having been seen since 2000.
  • That's not to say it wasn't largely signposted. It was expected to have been much worse had it not been for Australia's first trade surplus since the 1970s being recorded just one day prior, helping bolster GDP growth.

It's been clear for quite a long time that the Australian economy is struggling, but now the extent of it has been confirmed.

As expected, Wednesday's national account numbers came in and they tell a bleak story. In the June quarter, the economy grew just 0.5%, cementing the year-on-year growth at a pitiful 1.4%.

In fact, it's equal to September 2009, when Australia was just reeling from the global financial crisis (GFC). In fact, the country hasn't had a worse result since 2000.

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Despite the disappointing result, it could have been far worse. Forecasts just one day prior had pointed to a growth rate of just 1.2% for the year, the worst since the 1991 recession. That was flipped on its head however at the last minute, with a bumper trade surplus coming in, the country's first since 1975.

It still shot well under the Reserve Bank of Australia's forecast of 0.75% June growth and annual growth of 1.7% and will more pressure on the central bank to continue to cut rates.

"The RBA has over-estimated growth while not expecting any near term improvement in the unemployment rate nor having inflation anywhere near target, all while basing its forecasts on [0.5%] of further easing - its delay on this further easing has become puzzling," IFM chief economist Alex Joiner tweeted.

It marks a significant slowdown, with the economy already recording a per-capita recession earlier this year. Retail spending continues to shrink, wage growth is sluggish at best and unemployment reluctant to go any lower.

Unlike 2009, however, there's currently no world meltdown to speak of, although there is the real prospect of a global slowdown.

That may further threaten Australia's near three-decade run of continuous prosperity.

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