Australia in recession as mining, population hide shrinking economy

Much of blue collar Australia is doing it tough and struggling to make ends meet— but there’s one thing helping to hide the nation’s downturn, one expert has claimed.

Much of Australia is already in a recession as mining exports hide downturns elsewhere in the economy that have seen real GDP per person stagnate and GDP per hour worked slide backwards, according to Dr John Humphreys, chief economist for the Australian Taxpayers’ Alliance.

While December’s national accounts figures showed the overall economy grew by 0.5 per cent, the ATA said that much of this was due to China lifting restrictions on Australian coal and generally high resource prices meaning that the overall positive headline number was masking trouble in sectors like agriculture, mining, and retail.

According to Dr Humphrey’s analysis, a “major gap” has opened up between the mining sector and the rest of the economy, where people are working harder but seeing less return for their effort.

“When you factor in population growth, you see that GDP per person has stagnated, and if you factor in the time worked we see that GDP per hour has decreased sharply,” Dr Humphreys said.

“We won’t know the March quarter results for a couple of months, but I believe it will show another quarter of negative GDP per person growth, which would mean Australia is already in a recession.”

Australian coal and other mineral exports are carrying the economy. Photographer: Brendon Thorne/Bloomberg

“What we do know for certain is that the economy has stagnated, but people are working harder than ever.”

According to government figures released at the start of this month, in the last quarter of 2022 the agriculture sector shrank by 2.6 per cent, manufacturing by 1.8 per cent, wholesale trade by 0.7 per cent, and retail by 0.4 per cent.

The agriculture sector shrank by 2.6 per cent in the last quarter of 2022. Photo Erica Murree / Central & North Burnett Times

ATA president Brian Marlow said, “Blue collar industries and the retail sector are going under and the government doesn’t seem to be doing anything about it. These industries are the backbone of our economy and they’re going backwards.

“Changes can be made if the government is willing to do the right thing and put the interests of the Australian people first by taking decisive steps to boost productivity.”

“We’re calling on the Albanese government to reverse the economic downturn by urgently reducing taxes and regulation for all Australians, which will spur investment and innovation and lead to sustainably higher wages,” Mr Marlow said.

Originally published as Australia in recession as mining, population hide shrinking economy