The stronger-than-expected economic growth for the bushfire-affected December quarter fits Josh Frydenberg’s narrative perfectly — the economy was growing even after the impact of the first fires in November and remains resilient.
The Treasurer is keen to push his view that the economic fundamentals were sound and there was a “gentle curve” of growth, even after the bushfires.
Of course, he is warning that the coronavirus is an unknown and unpredictable “negative impact” but the timeline of pre-January performance and post-January performance is crucial to his argument that Australia was “back in surplus” and would have had its first budget surplus in a decade before the coronavirus outbreak.
Frydenberg is facing the reality that such a budget surplus is highly unlikely, but is simultaneously asserting a reason for such failure as being “circumstances beyond our control”.
In outlining this narrative Frydenberg constantly use one “R” word and absolutely refuses to use another “R” word.
The favourable R word is resilient – Australia is resilient, the economy is resilient, the health system is resilient and we’re more resilient than every other comparable economy around the world.
It’s understandable that he wants to reassure people about the resilience of the economy at a time of crisis, and equally understandable that he doesn’t want images of him uttering the dreaded recession word, even as he faces the real prospect of the March quarter going into negative growth.
As the Treasurer has already declared Australia is “back in the black” and is nursing the ambition of delivering the first surplus in a decade, there is no way he wants to fail there and become the first Treasurer in 30 years to usher in a recession — two consecutive negative quarters of growth.
The economy picked up momentum through the final three months of 2019, as GDP lifted 0.5 per cent over the quarter, bringing growth to 2.2 per cent over the year.
The relatively robust figures published by the Australian Bureau of Statistics on Wednesday — economists had expected quarterly growth of closer to 0.3 per cent — suggest the economy improved in the latter stages of last year, before the twin shocks of bushfires and the coronavirus emergency.
ABS chief economist Bruce Hockman “the economy has continued to grow and picked up through the year, however the rate of growth remains below the long-run average”.
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