How Australia’s finances stack up against the rest of the world

We look beyond the spin into whether Australia is doing well or struggling on the financial front when it comes to the budget, super, unemployment, lifestyle and other world economies.

Depending on who you listen to, Australia is either doing pretty good financially, or we’re stuffed.

These widely-differing views are pushed by political parties and lobby groups, and it’s enough to prompt everyday Aussies to wonder where the bloody hell are we.

Perhaps the best way to see how we’re really doing is to compare our finances with large nations and the home countries of many of our millions of immigrants.

Respected financial magazine The Economist, which first published more than 175 years ago, is a good starting point.

Our wealth can be measured in many different ways.

Every week it publishes tables of key economic indicators for around 40 major countries. By adding this data to other global research, you get a clearer picture of the sort of financial shape we’re in.

ECONOMIES

Australia’s a world record holder when it comes to economic growth, which is measured in GDP or gross domestic product.

We’ve gone 28 years without a recession (two consecutive quarters of negative GDP growth) while many other countries have had multiple recessions in that period.

However, our current annual GDP of 1.4 per cent is at the lowest level in more than a decade, and is lower than a majority of nations. That’s not a good look, although many economists — and the government, of course — believe GDP growth will pick up soon.

At the moment, it’s a borderline result for us.

UNEMPLOYMENT

Jobs fuel an economy and the wealth of its people. A lack of jobs causes widespread pain.

Australia’s unemployment rate is one of the few areas where we are lagging other nations. It’s at 5.3 per cent — well above most major countries — and economists believe it will go higher in the coming months.

However, we’re not at the bottom of the barrel. Greece’s official unemployment rate is 17 per cent, Spain’s is 13.9 per cent, Brazil is 11.8 per cent, Italy 9.9 per cent, France 8.5 per cent and India 8.2 per cent.

If measured against our global peers on this, we’re probably failing.

LIFESTYLE

It’s not always about money, but good finances help countries and cities give their people better lifestyles in areas such as healthcare, education, infrastructure, environment, stability and culture.

These factors are measured each year by The Economist Intelligence Unit to create a global liveability Index covering 140 cities. The latest index, published last month, put three Aussie cities in the top 10: Melbourne at number 2, Sydney (3) and Adelaide (10).

For the record, the Austrian city of Vienna was number one, but clearly we’re a big winner when it comes to liveability.

If you think our 5.3 per cent jobless rate is bad, spare a thought for Greece’s 17 per cent.

INFLATION

Consumer price inflation is low all over the world and we’re no exception. Our low CPI figure of 1.7 per cent is the reason our interest rates are at record lows, but we’re in the global ballpark.

While low inflation often leads to slower economic growth and low wages growth, it’s better than surging inflation that weakens the value of every dollar people have. Come on down, Argentina, which currently has inflation at 53 per cent a year and is suffering economically.

BUDGET

Countries’ Budgets are similar to household budgets. Money comes in, money goes out, and it’s generally unhealthy to be constantly spending more than you earn.

Australia’s Budget is now in a wafer-thin surplus, at just 0.1 per cent of our GDP. But that’s much better than the US and China, which both have budget deficits above 4 per cent of GDP, while most other major economies also have a budget balance in negative territory.

That’s a tick for us.

China’s Budget is in deficit, and so is the US, but Australia is in surplus.

SUPERANNUATION

Collectively we hold super nest eggs worth almost $3 trillion. That’s three thousand billion bucks.

Investment group Mercer ranks nations’ retirement income systems every year based on their adequacy and sustainability. Australia has consistently been in the global top five but is slipping slightly.

In the latest index, Finland knocked us out of third place, while the Netherlands and Denmark took the top two spots and Sweden with fifth.

That’s still pretty good. Fourth out of more than 30 countries is an impressive result.

WEALTH

Australians’ personal wealth hit a record high last year and has dropped slightly since then. However, the return of house price growth in Melbourne and Sydney may boost the next lot of wealth figures — due out on Thursday.

The latest Australian Bureau of Statistics data, released in June, showed wealth had been going backwards for nine months but each individual Australian was still worth an average $405,000. That ranks us within the top 5 per cent richest people on the planet.

If your wealth is $200,000 you’re still within the top 7 per cent, and $100,000 puts you inside the top 14 per cent.

While we may not feel individually wealthy as cost of living pressures bite, the overall numbers suggest the nation is in pretty good financial shape.

@keanemoney

Originally published as How Australia’s finances stack up against the rest of the world