Australians are already enduring the longest per capita recession on record following six consecutive quarterly declines and seven declines over the past eight quarters:
The OECD’s latest economic outlook report has downgraded Australia’s GDP growth forecast for 2024 to 1.1%, compared with 1.5% in its previous report in May.
The OECD also forecasts that Australia will record GDP growth of 1.8% in 2025.
Australia’s population growth rate was 2.4% in the year to June 2024, as illustrated below:
Therefore, the OECD’s forecast implies that Australia’s per capita recession will extend well into 2025, meaning the recession could run for 10 consecutive quarters or more—a truly unprecedented run.
The situation facing Australian households has been worse since they have borne the brunt of the Reserve Bank of Australia’s aggressive interest rate hikes.
Real per capita household disposable incomes in Australia suffered an 8.2% decline in the two years to June 2024, which was easily the sharpest fall on record:
Australia’s decline in household income has also been one of the largest in the world, according to the OECD (using data from the March quarter):
Real household disposable income should rebound modestly following the Stage 3 tax cuts, the easing of inflation, and expected RBA rate cuts early next year.
However, it is a long road back to health for Australian households and the broader economy, which are facing a “lost decade” of growth and living standards.
