Australia has experienced the longest period of economic growth in the developed world
29 Mar 2017
Australia's economy grew a strong 1.1 per cent in the fourth quarter (Q4), lifting Australia's annual economic growth to 2.5 per cent in 2016, according to the latest National Accounts figures released by the Australian Bureau of Statistics. The latest result is a positive sign that our economy has maintained the solid momentum that has already delivered Australia 26 years of uninterrupted economic growth. More dramatically, I estimate that Australia now holds the record for the longest period of recession-free growth for a developed country.
Australia is the only country in the developed world with a period of uninterrupted economic growth that long, based on the informal definition that a recession requires two consecutive quarters of negative economic growth. In other words, all of the other 34 member countries in the Organisation for Economic Co-operation and Development (OECD) have experienced at least one period of two consecutive quarters of negative GDP growth since 1991, with many economies experiencing two episodes of negative growth during that period: one in 2001 following the collapse of the Dot.Com bubble; and one in the 2008 Global Financial Crisis (GFC).
The period since 1991 is the longest period of growth that Australia has recorded for at least the past 50 years and has seen the economy register an average growth rate of 3.2 per cent per annum. The next longest period during which year-end growth remained positive was for about ten years between 1962 and 1971. In the 1970s and 1980s, our growth phases lasted only seven or eight years before another recession hit.
On a quarter-to-quarter basis, the December 2016 national accounts figure represented the 98th positive growth rate since the economy commenced to recover in Q3 1991 following the two consecutive negative growth rates in Q1 and Q2 1991. By my count, Australia's number of consecutive quarter's positive growth has now exceeded all OECD member countries including Ireland (78 quarters between Q3 1986 and Q1 2007), Poland (77 since its data became available from Q2 1995), Netherlands (76 between Q4 1981 and Q1 2003) and South Korea (71 since the Asian Financial Crisis in 1998).
My estimates for Australia’s relative growth performance are based on the growth accounts assembled by the OECD, which are available here. This data shows only two other economies come close to matching Australia’s recent economic record. The first is Japan, where the total number of positive quarterly consecutive growth rates was 63 from Q1 1975 to Q1 1993, according to the OECD. Following the Arab oil embargo, Japan went into a severe recession with real GDP shrinking by 1.2 per cent in 1974. Note also that although no two consecutive negative growth numbers were reported on a quarterly basis between 1960 and 1974, Japan did suffer a sharp real GDP slump of 3.4 per cent in Q1 1974, then experienced a modest recovery of 0.7 per cent and 1.3 per cent in the following two quarters and fell again in the Q4 1974. The second example is the Netherlands. After a ten-year period of economic growth from 1983 to 2002, the Netherlands economy officially went into recession in 2003 with two consecutive negative growth rates reported in Q2 (-0.3 per cent) and Q3 (-0.014 per cent). Some other estimates of relative growth performance tend to treat this period as one of uninterrupted growth for the Netherlands, but a close look at the OECD’s data does show the two sequential drops in GDP volume required to trigger the definition of a technical recession, even if declines were very small.
Australia’s economic resilience over the past two decades has been the envy of many economies in the world. Australia sailed through the Asian economic crisis of 1997–98, prospered through the US stock market bust and recession of 2001 and continued to grow through the GFC of 2008–09. At the same time, we have comfortably outgrown our peer group of other developed economies over the post-crisis period. Overall, Australia's real GDP grew by an annual average 2.7 per cent between 2012 and 2016. This rate was well above most major economies including the US, the UK (2.1 per cent per annum on average for both), Euro area (0.7 per cent per annum) and Japan (0.8 per cent per annum).
Australia’s impressive performance over the past two and half decades has been largely attributed to a wide range of factors including economic reforms, strategic location in the booming Asian region, and strong population growth.
 Why Australia Benchmark Report 2017
, chart: REAL GDP GROWTH BY ECONOMIC GROUPING
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& , United Nations, Department of Economics and Social Affairs, Population Division, World Population Prospects, the 2015 Revisions