Australia’s economy is one of the strongest in the world, experiencing year on year growth since 1991. One of the longest ‘good runs’ in the history of the developed world.
Australia’s growth has continued despite the turmoil of the global economic recession and the change of six prime ministers in the last eight years.
The nation's reputation as ‘the lucky country’ looks set to continue, with a wide range of factors pointing to another good year of growth in 2019.
Elections and housing
There is plenty of commentary about the challenges facing Australia’s housing market, which has experienced a buoyant run of years fuelled by foreign investment and local mechanisms such as negative gearing.
However, Australia’s government is not likely to be taken by surprise by any underlying weaknesses in the market, unlike the US housing sector, which collapsed spectacularly in 2008 and left banks and governments scrambling.
Liberal Prime Minister Scott Morrison’s government has just forecast that the national deficit in 2018-19 would be at its lowest level for a decade, and foreshadowed a surplus for 2019-20.
With a federal election predicted for early 2019, that set of numbers could be crucial, either for Morrison’s government to carry on with, or in the event of a Labor victory, for Labor’s Bill Shorten to inherit.
Combined with a low unemployment rate of under six per cent, any ructions in the housing market should be able to be handled quickly by a fiscally sound government and a private sector enjoying solid job market growth with a wide pool of quality workers for hiring.
While overall wage growth itself remains relatively slow, pay rates are still somewhat competitive , with a high minimum wage allowing the cost of living to be kept in check. This, in turn, will help bolster Australian households and ensure debts can be serviced and investments continue.
Growth factors for Australia
Business confidence in Australia’s economy remains high, with major infrastructure projects, and the mining sector continuing its buoyant growth, with advances in oil and gas exploration and delivery creating new development.
Another positive outlook are the defence and space sectors, which could help drive technological and manufacturing advances. Australia recently took delivery of its first F-35 Joint Strike Fighters, whose stealth technology and advanced supply needs could benefit the nation’s aeronautical industry.
Meanwhile, contracts for the building of Air Warfare Destroyers and patrol boats have been divided between Western Australia and South Australia, with Adelaide recently winning the right to host the headquarters of the national space agency.
These are key steps toward a more advanced technological future, which combined with Australia’s strong mining and business sectors, could see the nation’s economy continue to grow and add greater capacity.
However, cuts over recent years to the higher education sector and overall research funding will need to be addressed sooner rather than later, to support the progression to this advanced technological future.
Our low unemployment rate means that we do face a shortage of talent in a multitude of job areas of the economy, so businesses will need to factor this in to their strategic plans; which in turn could see wage growth increase over 2019.
Overall though, while Australia’s economy faces many challenges in 2019, the country is well positioned to tackle them as an agile economy, driven by a qualified and competent workforce enjoying a high standard of living.