Question

According to the article, is Australian economic growth increasing or decreasing compared to previous years? Provide some evidence from the article supporting your view. (6 marks)

Country facing a lost decade of growth, ANZ warns

By Shane Wright (Sydney Morning Herald, 21 January 2020)

Australia is facing a lost decade of economic growth, ANZ has warned, that will see living standards slip and wages grow modestly while putting pressure on the Morrison government's plan for a string of budget surpluses.

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ANZ head of Australian economics David Plank said growth through the current decade would average 2.6 per cent, with that tipped to fall to between 2 and 2.5 per cent across the 2020s. He said that level of growth, lower than both estimated by the Reserve Bank and the federal Treasury, would be driven by tepid non-mining business investment, weak productivity and household consumption held back by high debt and modest wage increases.

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Australian households, despite record levels of wealth due to high house prices, were carrying record levels of debt that would crimp their spending plans.

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In its December budget update, Treasury forecast economic growth to lift to 2.75 per cent through 2020-21 and then climb to 3 per cent for the next two years. That level of growth is expected to help drive down unemployment and push up wages.

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Answer 1

The Australian economic growth has decreased in the current year when compared to previous years. It is caused by various reasons like reduction in household spending and weak productivity. The high debt levels is an issue because that is leading to a major cut in consumption which is leading to less growth than the decade average growth.

But it is projected that for the next financial year there will be a higher economic growth which will continue to increase for the next two years. This will bring down the unemployment levels in the country.