Big blow for Albo: Australian economy grows at slowest pace in more than three decades

Australia’s economy is now growing at its slowest pace since the early 1990s recession, outside of a pandemic.

Gross domestic product grew just 1 percent in the year through June, well below the long-term average of 3 percent.

Outside of the 2020 pandemic, this was the slowest annual pace of economic growth since the 1991 recession, the last economic crisis triggered by aggressive interest rate hikes.

Australia is not yet in a technical recession, defined as two consecutive quarters of economic contraction.

But the country has been in a per capita recession since mid-2023, with output per Australian falling by 1.5 per cent over the last financial year.

While productivity grew a weak 0.5 percent over the year, it fell 0.8 percent in the June quarter over three months.

The cost of living crisis is really hitting home, with household spending falling 0.2 per cent, marking the worst drop since mid-2021 when the Delta outbreak prompted lockdowns in Sydney and Melbourne.

Australia is also experiencing a record number of corporate insolvencies, following 13 interest rate hikes by the Reserve Bank in 2022 and 2023.

Prime Minister Anthony Albanese’s Labor government is due to go before voters in May next year, and Reserve Bank Governor Michele Bullock last month ruled out rate cuts before Christmas.

Julia Gillard lost her Labor majority in 2010 in the wake of the global financial crisis, even though annual economic growth was a much more respectable 3.3 percent.

Weak economic activity has traditionally made it difficult for Labor governments to win re-election; Paul Keating only prevailed in the 1993 election because his Liberal opponent, John Hewson, had proposed a hated 15 percent GST.