Australia claims recession-free world record

Business has been booming Down Under for a quarter of a century, but is trouble ahead?

With Australia's economy expanding by 0.3% in the first quarter of 2017, the country celebrated the breaking of a world economic growth record yesterday.

The 103rd successive quarter without a "technical recession" (two consecutive quarters of negative GDP growth) means that even if a retreat is recorded in Q2, it is surpassing a previous winning streak supposedly held by the Dutch between 1981 and 2008.

To put it in other terms, the nation has essentially enjoyed 26 years of increasing prosperity.

The Australian Bureau of Statistics revealed that, though the manufacturing sector had suffered a rare slip, strong growth was seen in areas such as finance, insurance, wholesale trade and healthcare.

Cyclone Debbie hit Northern Queensland on Tuesday March 28, causing widespread damage. Picture by: NurPhoto/SIPA USA/PA Images

If there are any potential dark clouds gathering Down Under, the 1.7% rise over the 12 months to the end of March did mark its slowest pace of annual growth since late 2009.

One of the challenges faced in the quarterly period, according to Australian treasurer Scott Morrison, were weather conditions affecting exports:

"I'm advised particularly on other exports in the west. Exports declined by 0.6% in the quarter, detracting from growth... particularly in the aftermath of Cyclone Debbie."

There are question marks over whether it is merely freak storms being the sluggish pace.

Picture by: Bodo Marks/DPA/PA Images

Commonwealth Bank senior economist Michael Workman said the newest figures were disappointing given the global financial landscape:

“The Australian economy began 2017 with a whimper following a decent pace of expansion in the final quarter of 2016.

“The weakness in today’s data extends beyond the weather, and the slowdown in the domestic economy has occurred at a time when the global economic backdrop has improved.

“This suggests that policymakers have their work cut out for them if Australia is to post the kind of growth outcomes they have forecast over 2017.”

"In the context of the past few years, it is still a fairly weak outcome," JP Morgan economist Tom Kennedy said.

"The real issue is that consumption is still pretty soft even though the saving rate fell... and (capital expenditure) was flat, still not doing anything.

"That's really important for the Australian economy so the domestic drivers of growth in Australia are still pretty underwhelming."

Picture by: Jon Buckle/EMPICS Sport

For his part, Morrison tempered his talk of "continued resilience" with a warning:

"For Australians sitting at home, those sorts of things are less important than what is going to happen to growth in the future.

"A generation of Australians have now grown up without ever knowing there was a recession; I think that is a tremendous national achievement, but it's not one that can be taken for granted."