Australia’s lost decade is about to turn into a lost generation

Not that we think GDP matters much but given it’s the accepted benchmark of success then let’s give ourselves a fail, from the IMF today:

We’re not going to rebound like that. No way. Domestic demand is toast. My best guess is we’ll look more like Canada: 2019 1.5%, 2020 1.8%, 2024 1.7%.

Why? There are no growth drivers left:

• dwelling construction will shrink for two years;
• business investment won’t move much;
• household consumption will be constrained by weak income and fading house price gains;
• public investment has peaked but consumption will remain decent.

There’s is nothing else to drive domestic demand as the private sector remains conservative, the terms of trade fall away putting the clamp on fiscal spending and policy remains paralysed.

Australia’s lost decade is about to turn into a lost generation.