GDP figures paint a picture of a very sick Australian economy

The latest GDP figures paint a picture of an economy that is sick, seriously sick. And if you look deeper, the problems are even worse than they seem.

If it wasn’t for iron ore exports to China, Australia’s economy would be in serious trouble. Picture: Brendon Thorne

The GDP numbers paint a picture of an economy that is sick, seriously sick.

It is an economy that is being held up – barely, held up, I should stress - by a bizarre and explosively volatile and quite simply unreliable combination of China-driven demand for our iron ore, coal and natural gas, and the utterly out-of-control flood of 1500 migrants every single day of the year, weekends included.

In the December quarter the economy grew by just 0.2 per cent, after growing by just 0.3 per cent in the September quarter.

Indeed, it slowed through each quarter of 2023. So over the year, the growth was a miserable 1.5 per cent. Over the latest six months it was an even more miserable annual rate of just 1 per cent.

But when you factor in the utterly unprecedented population surge, thanks to the equally unprecedented migration flood, per capita growth was negative 0.3 per cent for the December quarter and a just horrible negative 1 per cent for the December year.

The economy was in clear and undeniable per capita recession all the way through 2023.

All those migrants kept the aggregate numbers positive. But it was a false positivity, with the per capita numbers, the numbers that reflect the actual reality for Australians, going backward.

And that’s before you factor in all the other negatives from the migrant surge – the pressure on housing, on infrastructure, the complications it causes for wages and business costs, and cost-of-living.

Now bring in China.

But for the surge in exports (that’s, importantly, export volumes) – combined with an entirely understandable fall in our demand for consumer imports, given the terrible state of the local economy and household incomes - the overall December quarter GDP growth number would have been negative 0.4 per cent

Let me just draw out and stress this utterly critical point.

But for China – and more general demand globally for our coal and natural gas – our economy would have shrunk by 0.4 per cent in the December quarter.

But for China, per capita GDP would have fallen by nearly 1 per cent – an annualised fall of close to 4 per cent. That’s recession, with a very big capital R, in terms of actual reality for individual Australians.

Ask yourself: can we really rely on China to keep the music playing? A China, that is experiencing all sorts of problems, with all that concrete poured into ghost cities and now also export challenges?

Yet we still have almost all our eggs, so to speak, in that basket marked ‘China miracle’.

That, and sustained massive immigration to supply workers on the one hand, and demand for businesses from construction and housing to retail, on the other.

And yet even with those two spigots still pouring through 2023, our economy was staggering.

The figures further confirm what I have been writing since Melbourne Cup Day. The Reserve Bank should not have delivered that last rate hike.

Governor Michele Bullock will have to think long and hard about what she proposes the board does next Tuesday week.