Monday, September 28, 2009

How Australia Escaped Recession?

Ross Gittings of the SMH makes an interesting point in today's Business Day. "Rapid growth in Australia's population has held up the economy." In the year to March, our population grew by 2.1%, the fastest in 40 years. What that means, of course, is that if GDP per head is considered, you need a rise in GDP in excess of 2.1% just to hold your position. On that basis, our GDP fell in three of the last five quarters (ie recession!), contracting 1.5% in the last 15 months.
Ross's point of course is that all this population increase requires investment in infrastructure to support the newcomers. Ross makes the significant point that while it's the Federal Government that decides to increase immigration, it's the state governments that will have to provide roads, hospitals, schools, etc to accommodate the new arrivals. And any failure to make sufficient land available will push house prices even higher.

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