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Has Australia fallen into a per capita GDP recession?
There is no doubt the Australian economy was weaker in late 2018 than it was during the first half of the year. It seems to have kicked off 2019 on a similarly weak note.
Recent economic news has been unambiguously poor and it follows the dismal GDP results released last month which showed per capita GDP falling 0.1 per cent in the September quarter. That was a poor result and forced most thinking economists to revise down their assessments of Australia’s economic health. If the upcoming December quarter GDP result, which is due for release in early March, reveals another drop in per capita GDP, the economy on a per capita basis will be going backwards.
This, quite clearly, is not good news.
It means living standards for the average Australian are falling and it poses questions about the current stance of economic policy.
The data flow could influence the timing of the election
Ready, get set!
There will be a Federal election within the next four months and the main question is the exact date when we will go to the polls. The current speculation focuses on three dates – relatively early on 2 March or nearer full term on 11 or 18 May. The decision will be taken by the Prime Minister, Scott Morrison, over the next few weeks.
One issue which will undoubtedly be critical to his thinking on the timing of the poll will be the economic data flow that will be released during the election campaign.
Just think – getting a poor GDP result or a rise in unemployment or weak wages data slap bang in the middle of the campaigning. It could be enough to derail the election strategy of the government and further erode its economic credentials. It is also important because the economy is clearly weakening. House prices are falling sharply, destroying the wealth of home owners, wages growth remains weak, the stock market is sick and consumer spending is unsurprisingly slow. There is also evidence in the various job advertisement series that the labour market is cooling which could see the unemployment rate creep up in the months ahead.
2 March Vs 18 May
The economic calendar suggests Mr Morrison would be wise to call the election for 2 March.