Growth in Australian economy 'not that bad'

Everyone knows that the mining boom is over. The non-mining sector is doing its best to save the economy from recession, but who actually gave it much hope?

Recent figures show that the Australian economy is growing much faster than we thought and 3% for 2015 isn't unreasonable. Of course this is at the lower end of Australia's growth target, but given the collapse of commodity prices and the decline in mining investment it is a nice surprise.

The Guardian have provided another excellent survey of economic data in the article linked below.

Notice that net exports are now a significant contributor to Australian growth. This is not from mining, but the non-mining sector. The depreciation of the Australian dollar has helped competitiveness and we are now seeing the 'J-curve' effect and confirmation that the Marshall-Lerner conditions apply.

Of course consumer spending (the largest contributor to GDP) and housing continue to be important. Should consumer sentiment drop there is still a danger of recession.

A good look through the data is advisable to all students, and you can play with the interactive graphs.

The Guardian article is here

This article is essential reading for VCE Economics students. Understanding the influences on the Australian economy over the last four years (demand and supply side) is critical. For IB this article shows how a depreciation in the exchange rate has worked through to higher net exports as well as providing important examples for both Paper 1 and 2.