Economics Analysis

No, Australia’s economy is not rebounding strongly. Who told you that?

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(Cartoon by Paul Dorin / @DorinToons)

The three key economic messages from the Morrison Government are quite false, but the media keeps promoting them anyway. Alan Austin reports.

WHEN WE EXAMINE the hard, cold data, three things become clear about Australia’s economy. The first is that the recovery from the pandemic-induced recession is weak. Second, compared with the rest of the world, Australia is lagging badly. And third, global economic conditions are extraordinarily benign.

Hence, it is the role of Coalition ministers and economics writers across Australia to declare loudly and repeatedly three forceful messages — that Australia is recovering from the downturn brilliantly, Australia is leading the world and that global conditions are terrible.

The reality compared versus the narrative

These three fake news messages were all highlighted in an email Treasurer Josh Frydenberg sent to voters from the Liberal Party email account last Thursday. This is not available online, but the same messages were repeated in an opinion piece in the Australian Financial Review on the same day.

Frydenberg asserted that:

‘Today’s Budget update confirms Australia’s economy is rebounding strongly.’

This is completely false. The June quarter collapse of gross domestic product (GDP) was 7.0%. The claw-back in September was less than half that, at a puny 3.3%. That is among the world’s weakest.

Many countries copped deeply negative June quarters due to the pandemic. Most are recovering well. Of the 37 developed OECD members, 13 recorded a higher recovery in September than their decline in June. In other words, their entire June quarter GDP losses were recouped.

New Zealand, for example, suffered a disastrous setback in June of 12.2% negative GDP growth. It bounced back in September with positive 14.0%. Ireland went backwards 3.2% in June but recovered with a thumping +11.1% in September. We can say New Zealand’s and Ireland’s economies are rebounding strongly, but not Australia’s.

Of that OECD group, another 20 countries recovered in September more than half their June losses. Spain, for example, lost 17.8% of GDP in June. But its September bounce-back was a healthy 16.7%. Not too shabby.

That leaves four countries bringing up the rear – Chile, Iceland, Greece and Australia – whose September gains were less than half the June losses.

Australia’s current recovery is, in fact, the weakest from any of the seven recessions since records began in 1959. In no previous recovery quarter has the positive number been so low relative to the preceding negative number.

International rankings

Frydenberg claimed that:

‘Australia is outperforming all of the major advanced economies.’

This is also the direct opposite of the truth. Among the 63 countries which have recorded GDP growth for the September quarter, Australia’s dismal 3.3% ranks a lowly 52nd. In the OECD, Australia ranks equal 32nd out of 37. Only three nations – Iceland, Greece and South Korea – are lower.

On the jobless rate, Australia’s 6.83% ranks 19th among the 37 OECD members.

Global economic conditions

As always, the Coalition wants voters to think it is battling external factors:

‘These include the timing, distribution, and effectiveness of the vaccine in stopping the spread of the virus globally, and trade tensions.’

This is also quite false. Australia has benefited enormously from U.S. President Donald Trump’s disastrous trade wars. Iron ore prices are at historic highs, having clicked over US$150 (AU$202) per tonne last week. Demand for virtually all Australia’s exports is robust, as are prices, with exports in October at $35.7 billion. The highest any monthly total reached during the entire Fraser, Hawke, Keating, Howard, Rudd and Gillard years was $28.4 billion.

Despite current disputes with China regarding six commodities, Australia’s overall exports have surged more than in any other OECD country since 2012.

Australia is one of very few developed nations – along with New Zealand, Taiwan, Singapore and Brunei – to have defeated the coronavirus.

So there is no excuse whatsoever for this disastrous deterioration in economic outcomes and no basis for shifting the blame elsewhere.

Mendacious mass media

All of these false Coalition claims have been regurgitated and amplified by the mainstream press.

These are actual headlines this month:

  •  ‘Australia's economy is “rebounding strongly” from the coronavirus recession, Josh Frydenberg says’SBS News;
  • 'Against all odds Australia's economy is humming along’Sky News;
  • ‘Federal Treasurer says economy is recovering faster than expected’ABC News;
  • ‘Millions off JobKeeper as Frydenberg signals economic recovery is taking shape’Sydney Morning Herald;
  •  ‘Australian Treasurer Frydenberg: Economy rebounding strongly but a challenging road ahead’ — FX Street;
  •  ‘MYEFO confirms economy’s strong rebound’Australian Financial Review; and
  • ‘Treasurer Josh Frydenberg declares “recovery is on” after JobKeeper numbers’

Each of these deceives its readers. None investigates – or even questions – the Government’s claims. None looks at Australia’s history. None looks abroad. None tells the truth.

Thus the year ends – depressingly in an already depressing year – with further confirmation that the role of the economics departments in all mainstream media organisations is to lie about the economy to keep the Coalition in office.

It needn’t be like this

There is no valid reason why Australia’s economy should rank near the bottom of the global tables. Throughout the last international crisis, from 2008 to 2012, Australia was among the leaders on virtually all measures.

Australia’s annual GDP growth was in the OECD’s top eight for most of that period. It was tippy-top in the first and second quarters of 2009. The jobless rate ranked third at the end of 2010, behind only Norway and South Korea.

The economy was clearly the world’s best from 2009 to 2013. It began to tumble in 2014 under the hapless Abbott/Hockey Administration. The collapse has accelerated every year since.

Unless and until citizens decide to send the malicious mainstream media out of business, there is little hope this will change. Have a great Christmas!

Alan Austin’s defamation matter is nearly over. You can read an update HERE and contribute to the crowd-funding campaign HEREAlan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @AlanAustin001

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